The BCG matrix, Boston Consulting Group, is a marketing and strategic tool for organizing and evaluating the products and services of a company or market. It is a decision-making marketing tool for weighting a company’s activities among those that generate profits, those that support growth, those that represent the future of the company, or those that do not earn more. enough but which constitute its heritage. In addition do not hesitate to make a SWOT matrix and a marketing benchmark.
Thanks to the BCG (Boston Consulting Group) matrix you will be able to set up and pilot a business development strategy.
The BCG matrix also makes it possible to position the products and / or services according to two axes:
- The growth rate of the market.
- The market share of the product / service compared to the competitors.
How to build the BCG matrix (Boston Consulting Group)?
In order to build the BCG matrix, nothing more simple, just follow these few intrusions.
Positioning of products and services: The company must organize each of its products and / or services on the matrix. Thus she is able to have information on the market share of the product / service and the growth of the market.
Generate value over the long term: The company should have a portfolio of products that includes high-growth products that need to inject cash and products with lower growth but high profits.
How to analyze the BCG matrix (Boston Consulting Group)?
A BCG matrix has a wide variety of product categories. To help you analyze this matrix, here are the main information to remember.
“Star” or “star” products: These are promising products for the company and more generally the leading companies in the business sector. The marketing strategy is to energize them with appropriate investments in order to keep up with the growth of their market and maintain a strong position. These products require a large amount of cash but also contribute to the profitability of the company, so they also generate profits. They are likely to become progressively “cash cows” with the saturation of the market.
“Cash cow” products: These are mature products or services that generate significant profits and cash but must be replaced in the near future as their growth is relatively low. It is therefore necessary to make them profitable because they make it possible to finance other activities in progress (notably the products “star” and “dilemmas”).
“Dilemma” products: These are mostly commercially unproductive products that do not generate profits unless the company decides to invest resources to maintain or even increase market share (then become stars) potential). They have a high demand for cash and the company has to think about investing more heavily or abandoning the product.
“Deadweight” products: These products are positioned in a declining and highly competitive market and the company will have to consider getting rid of them as soon as they are too expensive to maintain. The company must ensure that “dead weight” products are minimized. It must decide whether to add cash, otherwise it will have to abandon them in the short term.