BCG Matrix (4.5)

BCG Matrix

Measures market share and areas of market growth and shows a business where their products are in a market.

Stars

High-growth, high-market-share products that generate significant income but require heavy investment to sustain their growth. Over time, they typically mature and transition into cash cows.

Cash Cows

Low-growth, high-market-share products that generate strong profits and require minimal investment. They are well-established with loyal customers, allowing businesses to charge premium prices.

Problem Child

High-growth, low-market-share products that require significant investment to compete. Businesses must decide whether to invest in them to become Stars or phase them out.

Dogs

Low-market-share, low-growth products in declining markets that generate little revenue. Businesses often replace or eliminate them to avoid financial losses.

Boston Matrix Strategies

Refer to the strategic approaches businesses use to manage their product portfolio based on the BCG Matrix. These strategies help firms decide whether to invest, maintain, maximize profits, or discontinue products depending on their market share and market growth.

Building

Supporting problem child products, possibly with money from cash cows.

Holding

Continuing support in Star products.

Milking

Taking positive cash flow from established products and investing in other products.

Divesting

Identifying the worst performing dogs and stopping production/supply of these.