Analytical Model to achieve

marketing objectives
– BCG Matrix

Binod Aryal, SOMTU

BCG MATRIX – an intro
 Created by Bruce Henderson for BCG in 1968 to
help companies analyze their business units.
 Advantage: It helps it to allocate resources and use it
like an analytical tool in brand achieving marketing
objectives, product management & strategic goals.
 Concept: based on ‘what priority is to be given to the
product portfolio of a business unit.’
LOOK OF THE MATRIX
MUST UNDERSTAND…
 Market share: It is the percentage of the total
market that is being serviced by your company,
measured either in revenue or volume.
 Market growth: It measures a market's
attractiveness.
 Products’ portfolio: Is the collection of
products that make up the company.
 Product life cycle.
1. STAR
(high growth, high market share)
 Stars are those products that are strong.
 Often they need heavy investment to sustain their
growth.
 Use large cash, and produce large cash.
 If they maintain their relative market share, they
become cash cows.
 These are leaders.
 PLC : Growth
 For example, iPhone by Apple, Vitamin Water by
Coca Cola.
2. CASH COWS
(low growth, high market share)
 These are mature, successful businesses with
relatively little need for investment.
 They need to be managed for continued profit -
so that they continue to generate the strong
cash flows that the company needs for its Stars.
 These are the foundation.
 PLC : matured
 For example, IPod by Apple, Classic Coca
Cola.
 3. QUESTION MARK
(high growth, low market share)
 Demand is high and returns are low. If nothing is done
to change the market share, it absorbs large cash and
becomes a dog.
 These products have the potential, but may require
substantial investment in order to grow market share.
 Management have to think hard about "question marks"
- which ones should they invest in? Which ones should
they allow to fail or shrink?
 In my opinion, either invest nothing & let it continue; or
invest heavily; or sell off.
 PLC : introduction
 For example, Mac Book Air by Apple, Healthy
infusions by Coca Cola.
4. DOGS
(low growth, low market share)

 Dogs may generate enough cash to break-even,

but they are rarely, if ever, worth investing in.
 Keep it at a minimum.
 In my opinion, invest nothing; beware of turn
around plans; or else liquidate.
 PLC : decline
 For example, Apple – None, New Coke.
IMPORTANT POINTS
 A "question mark" has the potential to become
a "star" in the future if it is developed.
 A company should have at least one "cash
cow“ which can generate revenue that can be
used to develop one or more "question mark".
How BCG achieves marketing objectives

 Resource allocation
 Investment strategies.
 Assessment positions of product portfolio.
 Achieve organizational objectives.
 Turn around strategy.
 Allow marketers to develop strategies for the
two products in the same quadrant.
 LIMITATIONS
 High market share is not the only success factor.
 Market growth is not the only indicator for
attractiveness of a market.
 It uses only two dimensions and overlooks many
other factors.
 It assumes that each business unit is independent of
the others.
 Sometimes even dogs can earn more cash as cash
cows i.e. low market share can be profitable too.
CONCLUSION
 BCG matrix is used by large organizations with multi
products businesses.
 It measures growth rate and market share of each.
 Clear understanding on how the company is performing,
where each businesses lies in the matrix, and how to
develop strategies to do something about them, in order to
achieve the organization's overall goals and objectives.
 For marketing managers, it is useful to gauge the market
share and growth to see how your product is doing. When
you get a sense of which quadrant you product is in, then
develop necessary strategies to achieve your desired
outcome.
THANK YOU.