Marketing Metrics Assignment
BCG Exercise
Submitted by
Group 7
BCG Matrix
Relative market share position is defined as the ratio of a division’s own market share (or
revenues) in a particular industry to the market share (or revenues) held by the largest rival firm
in that industry.
From the above table we find that the relative market share is found by comparing it with the
best competitor using the formula:
Relative market share = Brands market share/Largest Competitors market share
QUESTION MARKS
Product 1belongs to this quadrant. These are products or businesses, that compete in high growth
markets but where the market share is relatively low. A new product launched into a high growth
market and with an existing market leader would normally be considered as a question mark.
Because of the high growth environment, they can be a “cash sink”.
Strategic options for question marks include:
Market penetration
Market development
Product development
Which are all intensive strategies or divestment.
STARS
Product 2 belongs to this quadrant. Successful question marks become stars. i.e. market leaders
in high growth industries. However, investment is normally still required to maintain growth and
to defend the leadership position. Stars are frequently only marginally profitable but as they
reach a more mature status in their life cycle and growth slows, returns become more attractive.
The stars provide the basis for long term growth and profitability.
Strategic options for stars include:
Integration – forward, backward and horizontal
Market penetration
Market development
Product development
Joint ventures
CASH COWS
Products 3 and 4 belong to this group. These are characterised by high relative market share in
low growth industries. As the market matures the need for investment reduces. Cash Cows are
the most profitable products in the portfolio. The situation is frequently boosted by economies of
scale that may be present with market leaders. Cash Cows may be used to fund the businesses in
the other three quadrants. It is desirable to maintain the strong position as long as possible.
Strategic options include:
Product development
Concentric diversification
If the position weakens as a result of loss of market share or market contraction then options
would include:
Retrenchment (or even divestment)
DOGS
Product 5 belongs to this quadrant. These describe businesses that have low market shares in
slow growth markets. They may well have been Cash Cows. Often they enjoy misguided loyalty
from management although some Dogs can be revitalised. Profitability is, at best, marginal.
Strategic options would include:
Retrenchment (if it is believed that it could be revitalised)
Liquidation Divestment (if you can find someone to buy!)
Successful products may well move from question mark though star to Cash Cow and finally to
Dog. Less successful products that never gain market position will move straight from question
mark to Dog.
Is the company balanced?
The company has 5 products each of it in different quadrants. From the BCG matrix we can find
that product 1 is a problem child and can either move to star and cash cow gradually. But the
size of the market is only 2.3. The profitability is high and in order to move the product from ? to
star, the company need to invest in it to become the market leader in this segment.
Product 2 is is star quadrant and is a market leader in high competitive market it generates
profitability sales of 6% only. Innovation is required to keep the product a market leader.
Product 3 and 4 are in cash cow quadrant and produce high profitability. But product 4 even
though sales are huge the profitability is comparatively low due to less market growth rate. The
profit made out of these can be invested in product 1 to move it to star. But product 1 market
size is only 2.3. Also it can invest in product 2 to make it a cash cow.
Product 5 is a dog and it is better to divest this product.
