BCG Matrix

The BCG Matrix is a portfolio analysis tool used to evaluate a company's product portfolio based on market share and market growth rate. It helps organizations allocate resources and plan for the future.

At a very high level, the BCG Matrix is used in the context of business.

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What is the BCG Matrix?

A visual explanation is shown in the image above. The BCG Matrix can be described as a matrix with the following quadrants:

  1. Stars: Products with high market share and high market growth rate. These products are the most valuable and require significant investment to maintain their position. For example, a new video game with a high market share in a rapidly growing market.
  2. Cash Cows: Products with high market share and low market growth rate. These products generate significant revenue and require little investment to maintain their position. For example, a well-established brand of cereal with a large market share in a mature market.
  3. Question Marks: Products with low market share and high market growth rate. These products require significant investment to grow their market share and become stars, or else they should be divested. For example, a startup with a new product in a fast-growing market, but facing intense competition.
  4. Dogs: Products with low market share and low market growth rate. These products are not generating significant revenue and require significant investment to grow their market share. They should be divested to focus on more profitable opportunities. For example, a brand of typewriters in a declining market.

What is the purpose of the BCG Matrix?

The BCG Matrix, also known as the Boston Consulting Group Matrix, was developed by the Boston Consulting Group in the 1970s. It is a portfolio analysis tool that helps companies evaluate their product portfolio based on two dimensions: market share and market growth rate. The matrix has four quadrants:

  • Stars: Products with high market share and high market growth rate. These products are the most valuable and should be invested in to maintain their position.
  • Cash Cows: Products with high market share and low market growth rate. These products generate a lot of revenue, but require little investment to maintain their position.
  • Question Marks: Products with low market share and high market growth rate. These products require significant investment to grow their market share and become stars, or else they should be divested.
  • Dogs: Products with low market share and low market growth rate. These products should be divested, as they are not generating significant revenue and require significant investment to grow their market share.

The BCG Matrix helps companies allocate resources and plan for the future by identifying which products are most valuable and require the most investment. It also helps companies identify which products are not generating significant revenue and should be divested to focus on more profitable opportunities.


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What templates are related to BCG Matrix?

The following templates can also be categorized as business and are therefore related to BCG Matrix: Product-Market Matrix, 4 Ps Marketing Mix Matrix, AI Capability-Value Proposition Alignment Matrix, AI Innovation-Value Alignment Matrix, AI Maturity Matrix, AI-Value Proposition Alignment Matrix, AI-Value Proposition Matrix, AIDA Marketing Matrix. You can browse them using the menu above.

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