What is the BCG growth share matrix?

Business is all about successful decision-making.

Deciding on where to invest and where to cut back is fundamental. However, finding suitable parameters for evaluating your products and making informed decisions can be challenging. This becomes especially daunting when it comes time to make investments for the future of your product or team.

To simplify portfolio management, Boston Consulting Group introduced the growth share matrix, frequently referred to as the BCG matrix. The BCG matrix breaks down your product offerings into four distinct quadrants to help you glean insights into where to prioritize the flow of resources. This streamlined approach relies on its simplicity to deliver actionable insights.

In this article, you’ll learn what the BCG matrix is, as well as read an example of it in practice.

What is the BCG matrix?

The BCG matrix is a simple way of categorizing your products to understand their growth potential and market share position. There are four distinct categories on the matrix that offer insight into whether the product is worth continued investment: dogs, cash cows, stars, and question marks.

Alongside the four quadrants, the matrix uses the following axes:

• Market share — How significant the product share is in the market
• Market growth — How the product is growing

The beauty of the BCG matrix rests on its simplicity. The following image represents the matrix I adapted:

Now, let’s understand the four quadrants of this matrix:

• Pets — When a product has low market share and struggles to grow, it’s more like a pet. It brings you expenses, but it doesn’t get you revenue. Such products drain the business and are candidates to be dropped or undergo a considerable strategy change
• Questions — Some products enjoy steady growth but struggle to acquire relevant market share. Such products are worth investing in because they can become stars and bring considerable business value
• Cash cows — Companies need stable income to survive and that’s the job of cash cow products. They may not grow continuously, but they have enough market share to bring solid revenue to the business
• Stars — A few products will create steady revenue while growing continuously. These products propel the company and enable investments in the rest of the portfolio

BCG matrix example: Apple

It’s undeniable that Apple has mastered steady growth and stable market share. The BCG matrix provides a way to better understand how it conceives of its product offerings:

Let’s understand the different categories and how Apple products look in the matrix:

• Pets — Apple Studio and the HomePod are neither growing nor finding a stable market share. Many fans buy such products, but struggle to grow beyond that
• Questions — Apple TV has been around for years; it has been growing since Apple invested in the subscription model and evolved the product, but the market share is still low compared to its potential. Apple Tags are growing and still defending their share
• Cash Cows — The MacBook and iPad have reached a sustainable market share and brought consistent revenue for a while now. They may not grow considerably, but they continue to help Apple with stability
• Stars — Since 2007, the iPhone has been the most representative Apple Product. AirPods and Apple Watches are other products with considerable growth and market share

Final thoughts

The BCG Matrix simplifies your decision-making process by categorizing products and enabling you to quickly understand which products bring value and which distract you. Try to have the courage to cut your distractions (pets) and invest in promising opportunities (stars). Alongside this, continuously review your product portfolio to account for market changes.

Featured image source: IconScout

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