Thus, there is a lot of competition in this segment. Stars are products with high market growth rate but low market share. The best product which comes in mind when thinking of Stars is the telecom products. Let’s discuss the characteristics and strategies of each quadrant in detail for BCG Matrix.Īlso Read Comparative analysis and its application in business 2) Stars

On the basis of this classification, strategies are decided for each SBU / Product.

Dogs – Low market share and low growth rate (less profitable or may even be negative profitability).

Question marks – Low market share and high growth rate (uncertainty).

Stars – High market share and High growth rate (high competition).

Cash Cows – High market share but low growth rate (most profitable).

Once the businesses have been classified, they are placed into four different quadrants divided into: Thus when we consider growth rate and market share together, it automatically gives us an overview of the competition and the industry standards as well as an idea of what the future might bring for the product. The market share, on the other hand, comprises of the competition and the product potential in the market. Thus by having 2 basic but at the same time very important factors on X axis and Y axis, the bcg matrix makes sure that the classifications are concrete.Ĭalculating the Market growth rate comprises of both industry growth and product growth rate thereby giving a fair knowledge of where the product / SBU stands in comparison to the Industry. A BCG can also map the expected development of your products and services.Also Read The GE McKinsey Matrix - Nine Box Matrix The BCG visualises the current and potential market impact of the products or services in your portfolio. Sometimes the best thing is just to get rid of them.

Finally, dogs are products with low relative market share in a stagnant market.

These should be considered strategically: do they have what it takes to be a star one day?

Question marks are products with a low relative market share, but where there is a high potential for growth.

These are often old products toward the end of their life cycle.

Cash cows are products with a high relative market share, but not much growth.Stars are products with a high relative market share in a growth market.Each box or quadrant in the matrix has a name: Star, Cash cow, Dog or Question mark. The matrix has two axes: the horizontal axis represents the relative market share of a product, and the vertical axis represents the market growth. BCG stands for Boston Consulting Group, the original creators of the tool. A BCG matrix is a 2-by-2 matrix you can use to classify your product or service suite.

How to make bcg matrix