Boston Consulting Group matrix


According to Bruce Henderson, founder of the Boston Consulting Group, "To be successful, a company should have a portfolio of products with different growth rates and different market shares". This model is similar to the brand perceptual model in that it uses a matrix. However, the Boston Consulting Group (BCG) matrix is used for a very different purpose. The model categorizes products in a portfolio into stars, cash cows, dogs and question marks by looking at market share and market growth. This is why it is sometimes called the growth–share matrix. It is used primarily to maximize long-term value creation in a business by maximizing high-potential areas and minimizing poor performers.

Cash cows – high market share in a slow-growth environment

Cash cows are strong and safe products. They generate money steadily in a market that is not growing at any pace and, as such, do not require much investment. As a result they are highly profitable.

Dogs – low market share in a slow-growth environment

Dogs are not the strongest part of the portfolio and can in fact be damaging for a business. They tend to break even and so do not offer a great deal of benefit to the business. Businesses will generally look to reduce dogs or sell them off and should be very wary of investing money into them as returns are unlikely.

Question marks – low market share in a high-growth environment

Question marks are aptly named as they can go in either direction. They are growing rapidly but have a low share so they consume a lot of cash and do not generate a great deal. A question mark can become a "star" if it gains market share and then even a "cash cow" if the market slows, but it also has the potential to be a "dog" if the market slows before it has gained momentum. Decisions around what to do with question marks must be based on extensive analysis – to invest or not to invest.

Stars – high market share in a high-growth environment

Stars generate cash due to having a strong market share but they also swallow up a lot of investment due to the high growth environment. Once the growth declines, stars become cash cows; therefore, having a range of stars in your portfolio that can become the next cash cows is an important strategy.
The matrix itself shows not only the position of each product but also, by utilizing the area or size of each category, the value of each product. This therefore gives a snapshot of profitability and cashflows of an organization. Ultimately, cash cows and dogs are at either end of the scale and so all business units will move to one end or the other eventually and there is a common path: question mark – star – cash cow – dog. Of course it is not the situation for most companies, or indeed the aim, to have a set of products that simply fall into one of these categories and in fact a blend of these is important to be able to describe your portfolio as balanced:
  •  Cash cows exist to supply funds that can be used to invest in the future of the company. 
  • Stars, due to their high growth potential and high market share, are the products that build this future. 
  • Question marks are items to steer into your next set of stars. 
  • Dogs should be removed.
One key thing to remember is that the BCG matrix has complications and has been misinterpreted and misused many times, so understanding the intricacies of it and how to apply it (and indeed when to apply it) is crucial.

What does this mean for digital marketing? 

The BCG matrix will inform which products you should be selling through which methods and channels, which will influence your overall digital strategy. You can also use it to assess your digital channels themselves and understand, therefore, whether you are applying your focus effectively. For example, is paid search a cash cow or a dog? The value of this channel is often debated and so being able to substantiate where your channels fit on the BCG matrix is a great way to communicate how your channel strategy will be managed. Moving SEO from a question mark to a star is a common goal of businesses that have poor natural search performance but understand the steps to make improvements.

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