bcg-matrix-examples

BCG Matrix Examples

Business / By / April 12, 2022

The Boston Consulting Group (BCG) matrix, also known as the product portfolio matrix, is a tool used to assess the strategic position of a company’s brand portfolio.

The BCG matrix was developed in 1968 by Boston Consulting Group founder Bruce Henderson in a short essay titled Perspectives. At its peak, Henderson’s model was used by approximately 50% of all Fortune 500 companies. Today, it is still one of the most popular product portfolio analysis methods and is a central component of many business school curriculums. 

The approach places a firm’s products and/or services into a 2×2 matrix with four quadrants that measure market share and growth rate. Each quadrant is described as follows:

  1. Question marks – high market growth/low market share products.
  2. Stars – high market growth/high market share products.
  3. Dogs – low market growth/low market share products, and
  4. Cash cows – low market growth/high market share products.

In this article, we’ll explain some BCG matrix examples from the likes of Coca-Cola and Apple.

Coca-Cola

Coca-Cola is one of the most recognizable brands in the world, but its true global presence combined with shifting consumer preferences means it does not necessarily dominate every market it enters. 

  • Question marks – as the soft drink industry undergoes rapid transformation toward healthier alternatives, the question mark quadrant is perhaps the most important to Coca-Cola. To that end, the company has invested a lot of money in low or no-calorie drinks such as tea and fruit juice. Diet-Coke is another product that falls within this quadrant. Despite attempts by Coca-Cola to market it as a healthier alternative, the product has not been able to gain significant traction.
  • Stars – bottled water is one product that Coca-Cola has been able to move from the question mark quadrant to the stars quadrant. Brands such as Kinley, Dasani, and Glaceau Smartwater are significant players in the rapidly growing bottled water market. In the United States alone, sales of the latter two brands accounted for $1.911 billion in sales during 2021.
  • Dogs – Coca-Cola Life is an example of one product that falls in the dogs quadrant. The product, which was a lower-calorie version of Coca-Cola, was made with the natural sweetener stevia. Critics derided the company for greenwashing, but, in any case, consumers showed little interest in the natural alternative.
  • Cash cows – the Coca-Cola company has quite a few cash cow products, none more significant than Coca-Cola itself. Growth is limited since the product is sold in more than 200 countries and territories around the world. However, the drink remains immensely popular and a market leader despite a decline in global soft drink sales.

Apple

Apple can boast a diverse product line that caters to a wide audience base. Let’s take a look at various Apple products in terms of the BCG matrix.

  • Question marks – while Apple has a dominant market share in many contexts, Apple TV and Apple AirPods face strong competition from both established brands and smaller companies. Apple TV in particular is a reasonable quality product that was simply ahead of its time. It may become more popular when consumers can appreciate the importance of the fact that it is part of the Apple ecosystem.
  • Stars – the Apple iPhone is a star product that continues to deliver. With each update, the iPhone seems to set new innovative standards and smash previous sales records. The iPad and Smartwatch are not far behind.
  • Dogs – the iPod could be considered an example of a dog product. While it only took the company five years to sell 100 million iPods, the longevity of the portable music player market was cut short by smartphone innovations and the rise of music streaming services.
  • Cash cows – in terms of cash cows, the MacBook, iMac, and iPad enjoy relative dominance in their respective markets. These three products enjoy high brand equity, with devoted consumers more likely to purchase Apple products over comparable (and sometimes cheaper) alternatives.

Key takeaways:

  • The Boston Consulting Group (BCG) matrix, also known as the product portfolio matrix, is a tool used to assess the strategic position of a company’s brand portfolio. The matrix was developed in 1968 by Boston Consulting Group founder Bruce Henderson.
  • Coca-Cola is one of the most recognizable brands in the world but is not immune from failed product launches or intense competition. As the soft drink industry wanes and consumers choose healthier alternatives, the question mark quadrant is perhaps the most relevant to the company’s long-term success.
  • For Apple, products in the question mark quadrant may become more successful over time since they are integrated with other, more popular products. The iPhone, iPad, and Smartwatch are all products that enjoy tremendous market share, while the company’s laptop and desktop products are considered cash cows.

Strategy frameworks

Ansoff Matrix

ansoff-matrix
You can use the Ansoff Matrix as a strategic framework to understand what growth strategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growth strategy can be derived by whether the market is new or existing, and the product is new or existing.

GE McKinsey Model

ge-mckinsey-matrix
The GE McKinsey Matrix was developed in the 1970s after General Electric asked its consultant McKinsey to develop a portfolio management model. This matrix is a strategy tool that provides guidance on how a corporation should prioritize its investments among its business units, leading to three possible scenarios: invest, protect, harvest, and divest.

Porter’s Five Forces

porter-five-forces
Porter’s Five Forces is a model that helps organizations to gain a better understanding of their industries and competition. Published for the first time by Professor Michael Porter in his book “Competitive Strategy” in the 1980s. The model breaks down industries and markets by analyzing them through five forces

McKinsey 7-S Model

mckinsey-7-s-model
The McKinsey 7-S Model was developed in the late 1970s by Robert Waterman and Thomas Peters, who were consultants at McKinsey & Company. Waterman and Peters created seven key internal elements that inform a business of how well positioned it is to achieve its goals, based on three hard elements and four soft elements.

Porter’s Generic Strategies

competitive-advantage
According to Michael Porter, a competitive advantage, in a given industry could be pursued in two key ways: low cost (cost leadership), or differentiation. A third generic strategy is focus. According to Porter a failure to do so would end up stuck in the middle scenario, where the company will not retain a long-term competitive advantage.
differentiation-strategy
cost-leadership
According to Porter there are three core strategies for competitive positioning: cost leadership, differentiation and focus. Cost leadership is straightforward, as the player rolling this out will become the lost-cost producer in the industry.
focus-strategies-porter
stuck-in-the-middle

Porter’s Value Chain Model

porters-value-chain-model
In his 1985 book Competitive Advantage, Porter explains that a value chain is a collection of processes that a company performs to create value for its consumers. As a result, he asserts that value chain analysis is directly linked to competitive advantage. Porter’s Value Chain Model is a strategic management tool developed by Harvard Business School professor Michael Porter. The tool analyses a company’s value chain – defined as the combination of processes that the company uses to make money.

Porter’s Diamond Model

porters-diamond-model
Porter’s Diamond Model is a diamond-shaped framework that explains why specific industries in a nation become internationally competitive while those in other nations do not. The model was first published in Michael Porter’s 1990 book The Competitive Advantage of Nations. This framework looks at the firm strategy, structure/rivalry, factor conditions, demand conditions, related and supporting industries.

SWOT Analysis

swot-analysis
A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.

PESTEL Analysis

pestel-analysis
The PESTEL analysis is a framework that can help marketers assess whether macro-economic factors are affecting an organization. This is a critical step that helps organizations identify potential threats and weaknesses that can be used in other frameworks such as SWOT or to gain a broader and better understanding of the overall marketing environment.

Blue Ocean Strategy

blue-ocean-strategy
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

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