BCG created
this growth-share model in 1970 but it’s still an effective tool today. The vertical axis depicts market growth. The horizontal axis represents your market
share relative to your competition. This
tool will enable you to map where a business unit stands with respect to growth
and relative market share.
There are
four quadrants on the matrix. Cash Cow is a business unit that isn’t
growing rapidly at the moment but it does have good market share compared to
the competition. A cash cow tends to
provide sustained cash flow. Another
category is called Stars. That is a business unit where there is quite
a bit of growth and also a good position in market share compared to the
competition.
The third
section is labeled Question Mark (?). A business unit falls into this quadrant when
there is growth but relative market share is not very large compared to the
competition. The last category is Dogs.
A business unit will fall into this section when there is little growth
and little relative market share.
Determine whether
your business unit is a Cash Cow, Star, Question Mark or a Dog. Then evaluate the strategic options to move
forward. You can build it up, hold it as
it is, harvest resources or divest.
Building up
a business unit requires input of additional resources to grow and increase
market share. On the other end of the
continuum is divestiture where you would move resources out of one unit to put
into your Stars and Question Marks.
Leverage the growth-share matrix to make a strategic decision as to how
you are going to respond to your businesses placement.
Once a Day Marketing™ positions brands to become #1 in the minds of target customers. Visit our website at www.onceadaymarketing.com. Contact James Glover at (505) 501-1330 or email glover@onceadaymarketing.com. Listen to Ask Those Branding Guys™ every Monday at 11:00am (MST) streaming live on SantaFe.com KVSF 101.5 FM.
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a Day Marketing™. All rights reserved.
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