BCG MATRIX (BOSTON CONSULTING GROUP)

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The BCG matrix (Boston Consulting Group) is a strategic analysis tool used by companies to evaluate their product or service portfolio. It was developed by the Boston Consulting Group in the 1970s and is based on the premise that a company's success depends on maintaining an appropriate balance between its products or services at different stages of the life cycle.

The BCG matrix is divided into four quadrants

1. Star: are products or services with a high market share and high growth. These products have high profit potential and need to be pushed to maintain their position.
2. Dairy cow: are products or services with a high market share but low growth. These products generate stable profits and are expected to remain profitable for some time.
3. Question: are products or services with a low level of market share but high growth potential. These products need a large investment to boost their growth and increase their market share.
4. Dog: are products or services with low market share and low growth. These products do not generate much profit and do not have much growth potential, so they are often considered a burden for the company.

The BCG matrix helps companies decide how to allocate resources and where to focus their marketing efforts. Products in the star category should receive more investment to maintain their leading market position, while products in the question mark category may require more investment to drive growth and increase market share. Products in the dog category can be withdrawn or eliminated, while products in the dairy cow category must be maintained and managed effectively to generate stable long-term profits.

Practical examples of the application of the bcg matrix

The BCG matrix (Boston Consulting Group) is a useful tool for assessing a company's product portfolio.

Below are some practical examples of how the BCG matrix can be applied:

1. Star product: a technology company has a software product that is widely used and dominates the market. This product is considered a "star product" in the BCG matrix, as it has a high market share and a steady growth rate.
2. Dairy cow: A food company has a cheese product that has been on the market for several years and has a stable market share, but is not growing rapidly. This product is considered a "cash cow" in the BCG matrix, as it generates a steady stream of revenue and profits for the company.
3. Unknown: a beauty products company has recently launched a new skin care product that has not yet managed to gain significant market share. This product is considered an "unknown" in the BCG matrix, as it has a high growth rate but a low market share.
4. Dog: A household appliance company has a dishwasher product that has been on the market for many years and has lost market share as competitors with more innovative products have emerged. This product is considered a "dog" in the BCG matrix, as it does not have a high market share or high growth potential.

In a nutshell, The BCG matrix is a useful tool to help companies evaluate their product portfolio and decide how to allocate resources and make strategic decisions. By identifying which are the star products, cash cows, unknowns and dogs, companies can adjust their marketing and product development strategy accordingly.

How can an entrepreneur apply the bcg matrix in his company?

An entrepreneur can apply the BCG matrix in his or her business by following the steps below:

1. Identify the products or services your company offers and rank them according to their market share and growth rate.
2. Graphically represent each of the products or services in the BCG matrix, placing them in the corresponding position according to the above classification.
3. Analyse each of the products or services according to their position in the BCG matrix and establish appropriate strategies for each one.
4. For products or services classified as stars, growth and expansion strategies should be implemented to take advantage of their high market share and growth rate.
5. For products or services classified as dairy cows, maintenance strategies should be implemented, as they have a high market share but a low growth rate.
6. For products or services classified as question marks, evaluation strategies should be implemented, as they have a low market share but high growth rate, and can become stars or dogs depending on their performance.
7. For products or services classified as dogs, exit strategies should be implemented, as they have a low market share and low growth rate, and may be consuming resources that could be better used for other products or services.

It is important to emphasise that the BCG matrix is an analytical tool and should not be the only source of information for strategic decision-making. Moreover, the results may vary depending on the sector, the market and the particular situation of each company. Therefore, it is recommended that entrepreneurs consult with experts in the field for a proper application of the BCG matrix in their company.