BCG Growth Matrix

BCG MATRIX BCG Matrix The BCG Matrix is a chart that was created by Bruce Henderson to analyze product lines and help marketers and e-commerce business owners decide which products to promote and market for the best returns (Roggio, 2014). The BCG Matrix uses two variables namely: market growth and market share. Market share is the percentage controlled by the company or retailer in the overall market. Small business owners can find out their percentage through research, by comparing their sales to the large companies who reports their market shares. They can also use Terapeak’s tools Google or Bing searches of industry publications. Market growth is the percentage at which the market is growing over a given period of time. Market or demand growth indicates opportunity. Low growth products or markets have greater competition and vice versa. Marketers and ecommerce owners can use industry analysis, published reports and third party tools to track sale rates to gauge market growth.
Marketers should plot the market share and market growth at least annually for each product category on the BCG Matrix. The BCG Matrix has four quadrants. Products in the Dogs quadrant are those in the lower right quadrat. They have low growth and low market share. These products should be closed out. The Cash Cow products are those in the lower left quadrant (Roggio, 2014). They have good market share and low growth. These products are harvested from with the revenue being invested elsewhere. The Question Marks products are those in the upper right quadrant. They have low market share and high growth. These products are promoted and advertised. The Stars are the upper left quadrant. They have strong market share and high growth. Marketers hold on to the Stars and try to continue to grow with moderate advertising and marketing.
The benefits of the BCG Matrix include helping marketers evaluate balance between the quadrants, seek experience and volume effects, prepare for the future, and manufacture new products at low enough prices to lead in the market share. BCG Matrix is also easy and simple to use. The limitations of the BCG Matrix is that it neglects synergism between product lines, the Dogs can earn more than Cash Cows sometimes, getting data can be a challenge, high market share sometimes does not reflect on profitability, low market share products can be profitable and small competitors with fast growing market shares are neglected.
References
Roggio, A. (2014). Using the BCG Matrix for Ecommerce Marketing Decisions. Practical ecommerce. Retrieved from http://www.practicalecommerce.com/articles/67826-Using-the-BCG-Matrix-for-Ecommerce-Marketing-Decisions