What is the BCG matrix?
Today I want to talk to you about the BCG matrix , also called the Boston Consulting Group matrix , a strategic tool that helps you analyze the status of your company’s products from a strategic Marketing point of view. Oman Email List , The success or failure in the sale of your company’s products is not only measured by the units sold. Long before designing the strategy that you will carry out for its promotion and commercialization, you must know how to analyze the type of product that you have in front of you and what is its position in the market, in addition to the trends in its life cycle.
Therefore, now we will see together what it is and how to make a BCG matrix. In addition to this, at the end of this guide, I will show you a couple of practical examples that will help you when creating your own, to try to better focus your business plan .
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What is the BCG matrix?
What is the Boston Consulting Group matrix model for?
What are the cycles of a product in the BCG matrix?
How to make a BCG matrix?
BCG matrix example
What is the BCG matrix?
The BCG matrix (or Boston Consulting Group) is a strategic Marketing tool, like the SWOT or CAME , but in this case it analyzes the state of participation and growth in the market of a company’s product portfolio.
The objective of this analysis is to know which products should be included in the company’s portfolio, and which ones are not so important to it.
With data from the BCG matrix, companies can assess the attractiveness of their product portfolios and thus decide with better judgment in which areas to increase their investment.
What is a company’s product portfolio?
I’m sure you already know it, but the product portfolio is the set of articles and services that a company sells and the market where they are destined.
This model is represented by a 2 × 2 matrix
The horizontal axis corresponds to market share: that is, the level or value of your company’s market share with respect to the value of your competition’s market share.
The vertical axis represents the market growth rate: that is, the evolution of demand in the market for the product we are analyzing.
In addition, within the BCG matrix itself, each of the four quadrants (question mark, star, cow and dog) that form it proposes a series of strategies that are highly recommended to carry out.
The so – called Growth Matrix & Participation , was designed in the 70s by the company that bears his name, B oston C onsulting G roup.
Although more than 50 years have passed since its creation, it is still very useful for almost any company today.
What is the Boston Consulting Group matrix model for?
One of the main benefits of the BCG matrix created by Boston Consulting Group, is to know which are the distribution and sale channels of a company’s products that achieve a higher ROI (or return on investment).
In this way, you can decide in a more strategic and profitable way, in which products to invest more resources and in which not.
In the world of Marketing, there are 4 investment strategies that you can implement once you have done this strategic analysis of your products:
1) Increase market share
In this case, you must promote those products that you have detected that can become more profitable and generate better profits in the short or medium term.
2) Defend your market share
Your position in the market is good, but every day you start to have more competition.
Here you have to develop new strategies that make you more competitive and help you protect your market share .
3) Elimination strategy
As its name indicates, this Marketing strategy aims to permanently remove or remove a product from the company’s catalog.
Companies can carry out this strategy by eliminating part of the production chain because, for example, it is defective. Or also, definitively eliminating the manufacture of said product.
Of course, we must communicate this decision to both customers and distributors.
4) Harvest strategy
It consists of designing an exit strategy from the market in an organized manner.
And it is that when profitability drops or more productive sectors appear, among other circumstances, many companies implement this Marketing strategy.
»You may also be interested in reading:
What is a business model?
How to do a market study?
What is Competitive Intelligence?
What are Porter’s 5 forces?
What are the cycles of a product in the BCG matrix?
The BCG matrix is represented by four product cycles , USA Business , which vary depending on the market growth rate (represented on the vertical axis) and the market share of the company (which we see reflected on the horizontal axis).
