Boston's Consulting Group (BCG) Matrix

Question 1

Definition

Answer 1

A marketing tool for product portfolio analysis
* looks at market growth and market share to assess the market potential for new and existing products

Question 2

What two questions are answered by BCG matrix?

Answer 2

1. Which products should receive the largest marketing budgets?
2. Which products should they continue to invest time, money and resources in to develop?

Question 3

Answer 3

Question 4

Dogs

Answer 4

• Generate little revenue as markets are declining
  
  • products should be divested (i.e. dropped or discontinued)

Question 5

Question marks

Answer 5

High potentiak but require substantial investment to develop into stars
* generate low revenue but incur high investment expenses
* need managers to decide which products to build and which to divest

Question 6

Stars

Answer 6

Successful products that generate large revenue
* require large investment to develop and promote in order to harvest most benefits (profits)
* become cash cows as market growth slows

Question 7

Cash cows

Answer 7

Mature and established products
* generate strong revenue and profits
* require minimal investment in order to hold their position
* used to maintain stars and grow question marks from sales revenue

Question 8

Uses of BCG (2)

Answer 8

• identifies the need to rebalance portfolio
• is a dynamic model as products can change categories

Question 9

Limitations of BCG (3)

Answer 9

• high market share does not always lead to profits
• does not identify causes of product positions
• should be used with other planning tools