It’s bringing in more money than is being invested in it, but it doesn’t have much growth potential. Cash CowĪ cash cow is a product or business that has high market share and is in a slow-growing industry.

There is no room for growth, which suggests that no new funds should be invested in it. DogĪ product or business with low market share in a mature industry is a dog. Each quadrant has a name and specific characteristics. The BCG Matrix is comprised of four quadrants that show high and low market share and high and low growth potential. It can be thought of as a “best guess” at what the future value of a market will be. Market-growth potential generally includes analysis of similar markets, as well as analysis of the underlying drivers for marketing growth. The reason is that this large generation is aging with more income and a longer life expectancy than any previous generation. How about the market for high-end skin-care products? Generally, markets for products that serve Americans born between 19-the baby boomers-are growing rapidly. anyway, bathroom tissue use tracks closely with population numbers, which have declined 0.7 percent since 1992. How about bathroom tissue-is that a high-growth market? Probably not. Let’s use some of the products in Proctor & Gamble’s portfolio to identify markets with different growth potential. The market-growth potential is more difficult to quantify, but it’s the other important factor in the BCG matrix. As the following table shows, Android phones have had the dominant market share over the past several years.

For example, what is the market share for different types of cell phones in the U.S.? The International Data Corporation reports these numbers quarterly. Out of 400 glass sold, you sell 200 glasses, or 50 percent of the total.Ĭompanies track market share data closely. For instance, if you run a neighborhood lemonade stand that sells 200 glasses of lemonade each summer, and there are two other competing lemonade stands that sell 50 glasses and 150 glasses, respectively, then you have 50 percent market share. Market share is the percentage of a market (defined in terms of units sold or revenue) accounted for by a specific product or entity. The BCG matrix considers two different aspects of a business unit or product: The company not only needs to complete a situation analysis for each business, but also needs to determine which businesses warrant focus and investment. The BCG matrix (sometimes called the Growth-Share matrix) was created in 1970 by Bruce Henderson and the Boston Consulting Group to help companies with many businesses or products determine their investment priorities. When a company has many different products or even many different lines of business, strategy becomes more complex.

Bcg matrix definition