BCG Matrix - Marketing Tool

BCG matrix can be a good guide in deciding your marketing and branding strategies. By using BCG matrix we can allocate resources and can used it as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis.

·        Dogs: These are products with low growth or market share.

·        Question marks or Problem Child: Products in high growth markets with low market share.

·        Stars: Products in high growth markets with high market share.

·        Cash cows: Products in low growth markets with high market share

How to use the BCG Matrix?

To apply the BCG Matrix you can think of it as showing a portfolio of products or services, so it tends to be more relevant to larger businesses with multiple services and markets. However, marketers in smaller businesses can use similar portfolio thinking to their products or services to boost leads and sales as we'll show at the end of this article.

Considering each of these quadrants, here are some recommendations on actions for each:

Dog products: The usual marketing advice here is to aim to remove any dogs from your product portfolio as they are a drain on resources.

However, this can be an over-simplification since it's possible to generate ongoing revenue with little cost.

For example, Facebook’s Dog — Messenger

Since almost everyone uses Whatsapp, an additional app like Messenger seems unnecessary. Facebook can consider divesting Messenger due to its low growth rate, and low market share, making it a dog.

Question mark products: As the name suggests, it’s not known if they will become a star or drop into the dog quadrant. These products often require significant investment to push them into the star quadrant. The challenge is that a lot of investment may be required to get a return.

Facebook’s Question Mark — Oculus

Oculus specializes in virtual reality (VR) hardware and software products. Large investments are required in research & development efforts, yet there is no certainty that Oculus will be successful and if people have a desire for VR. NYTimes reports Zuckerberg’s plans to invest $3 billion over the next decade to bring VR to millions of users, signaling Facebook’s intentions to turn Oculus into a Star.

Star products: Can be the market leaders though require ongoing investment to sustain. They generate more ROI than other product categories.

Facebook’s Star — Instagram

Besides its high market share, Instagram is also currently the highest growing SBU owned by Facebook, and has doubled its user base to 700 million monthly active users in two years. This is largely due to Instagram’s features ‘Direct’ and ‘Stories’. By sticking to its roots of visual communication while shrewdly adapting to new trends by investing in product development, Instagram has managed to stay on top of the game.

Cash cow products: The simple rule here is to ‘Milk these products as much as possible without killing the cow! Often mature, well-established products.

For example, Facebook’s Cash Cow — Whatsapp

Whatsapp’s growth rate has been more or less maximised, with few competitors. Investments in Whatsapp are hence deemed unnecessary. Their market share however, is very high, making Whatsapp a money generating Cash Cow.