BCG MATRIX WITH EXAMPLE -
(i) BCG matrix used to evaluate –
- Whether a product should be withdraw from market or not.
- Which product should be hold ?
- Which product should be include in product portfolio ?
- What should be the amount of investment on a product ?
(ii) A company should have product portfolio of different growth rates and market share.
(iii) It aims to evaluate each product on the basis of Market share and Market growth
BCG MATRIX CASH COW –
(i) Cash cows are those products which have High market share and Low growth rate.
(ii) Cash cow is those products which generate maximum revenue because of high market share.
(iii) Strategy for cash cows in BCG Matrix –
- Cash cow products require minimum investment.
- Business should hold cash cow products.
BCG MATRIX STARS -
(i) Stars are those products which have High market share and High growth rate.
(ii) Stars are the best products of the company.
(iii) Stars can become cash cow in long run.
(iv) Strategy for stars in BCG Matrix –
- Stars require maximum investment.
- All types of marketing, sales promotion, advertisement used for stars.
- Business should hold stars products.
BCG MATRIX QUESTION MARK –
- Question mark are those products which have Low market share and High growth rate.
- Generally question mark is newly launched products.
- Question mark products may give high return but the same it may be flop.
- Because of uncertainty these products are called “question marks”.
- Strategy for question mark is It requires mere investment.
BCG MATRIX DOGS –
(i) Dogs are those products which have Low market share and Low growth rate
(ii) These products not generate high revenue.
(iii) Strategy for dogs in BCG Matrix -
- It is not require high revenue.
- Business should divest these products or remap it.
CRITICISM OR LIMITATIONS OF BCG MATRIX
- The market share of the matrix does not guarantee profitability.
- It ignores the threat of substitute products. .
- The coherence as regards content between products and product groups is not incorporated.
- The BCG matrix does not show what the competition is doing.
- The BCG matrix may oversimplify the assessments of the facts.
HOW TO USE BCG MATRIX?
BCG matrix is a tool that help to understand, which brands the firm should invest in and which ones should be divested. Following are the steps involved: -
- Step 1. Choose the unit
- Step 2. Define the market
- Step 3. Calculate relative market share
- Step 4. Find out market growth rate
- Step 5. Draw the circles on a matrix