What is BCG matrix in simple words?

What is BCG matrix in simple words?

The Boston Consulting Group (BCG) growth-share matrix is a planning tool that uses graphical representations of a company’s products and services in an effort to help the company decide what it should keep, sell, or invest more in.

What is BCG portfolio model?

The Boston Consulting group’s product portfolio matrix (BCG matrix) is designed to help with long-term strategic planning, to help a business consider growth opportunities by reviewing its portfolio of products to decide where to invest, to discontinue, or develop products.

What is BCG matrix analysis?

BCG Matrix (also known as the Boston Consulting Group analysis, the Growth-Share matrix, the Boston Box or Product Portfolio matrix) is a tool used in corporate strategy to analyse business units or product lines based on two variables: relative market share and the market growth rate.

What is BCG matrix What are its uses limitations?

Limitations of BCG Matrix BCG matrix classifies businesses as low and high, but generally businesses can be medium also. Thus, the true nature of business may not be reflected. Market is not clearly defined in this model. High market share does not always leads to high profits.

What is BCG matrix with example?

A perfect example to demonstrate BCG matrix could be the BCG matrix of Pepsico. Cash Cows – With a market share of 58.8% in the US, Frito Lay is the biggest cash cow for Pepsico. Stars – Even though Pepsi’s share in the market has been reduced to 8.4%, it’s still the star for Pepsico because of its brand equity.

How is the BCG matrix used in portfolio planning?

  1. Choose the unit. BCG matrix can be used to analyze SBUs, separate brands, products or a firm as a unit itself.
  2. Define the market. Defining the market is one of the most important things to do in this analysis.
  3. Calculate relative market share.
  4. Find out market growth rate.
  5. Draw the circles on a matrix.

How does BCG matrix work?

The BCG matrix assesses the company’s product portfolio by placing each product, division or SBU (strategic business unit) on a 2×2 grid. The product life cycle is reflected by market growth, and the experience curve is mirrored by the relative market share. …

What is the advantage of BCG matrix?

BCG Matrix Advantages It provides a high-level way to see the opportunities for each product in your portfolio. It enables you to think about how to allocate your limited resources to the portfolio so that profit is maximized over the long-term. It shows if your portfolio is balanced.

How do we define portfolio analysis in marketing?

How do we define “portfolio analysis” in marketing? The process by which management evaluates the products and businesses making up the company. A portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development or diversification.

What are the advantages of BCG matrix?

What is portfolio analysis in simple words?

Definition: Portfolio analysis is an examination of the components included in a mix of products with the purpose of making decisions that are expected to improve overall return. The term applies to the process that allows a manager to recognize better ways to allocate resources with the goal of increasing profits.

What is a product portfolio?

A product portfolio is the collection of all the products or services offered by a company. Product portfolio analysis can provide nuanced views on a stock type, company growth prospects, profit margin drivers, income contributions, market leadership, and operational risk.

Which companies can use a BCG matrix?

The growth share matrix was created in 1968 by BCG’s founder, Bruce Henderson. It was published in one of BCG’s short, provocative essays, called Perspectives.At the height of its success, the growth share matrix was used by about half of all Fortune 500 companies; today, it is still central in business school teachings on strategy.

How to calculate BCG matrix?

Choose the unit. BCG matrix can be used to analyze SBUs,separate brands,products or a firm as a unit itself.

  • Define the market. Defining the market is one of the most important things to do in this analysis.
  • Calculate relative market share.
  • Find out market growth rate.
  • Draw the circles on a matrix.
  • How to build a BCG matrix?

    Collect data and build the source table. A list of elements to be analyzed is made up at the first stage.

  • Calculation of the growth market rate.
  • The formula for calculating the growth market rate in Excel:*The percentage format is set for cells in column D.
  • Calculation of the relative market share.
  • How to present BCG matrix?

    If you run a bunch of campaigns on Facebook Ads or on AdWords you would always be required to choose which campaigns are your preferred ones.

  • It pays to analyze this by setting up all your campaigns in a BCG Matrix.
  • I find one or two of my campaigns that require less money and are producing clicks or conversions at a very low cost.