BCG Matrix is also known as the Growth/Share Matrix. The Boston Consulting Group created it in the 1970s. Its function is to manage the product portfolio and indicate the best investment strategy for a company.
Especially those who work with sales should know and use the BCG Matrix.
The BCG Matrix helps to plan strategies and set goals. Besides that, to move products through the quadrants according to their performance.
The 4 quadrants of the BCG Matrix
The BCG Matrix has four main categories. The quadrants also make it easy to identify a product’s life cycle and where it fits at each stage. The four symbols represent a certain degree of profitability: question marks, stars, pets (often represented by a dog), and cash cows.
Each of the four quadrants represents a specific combination of relative market share and growth:
- Low Growth, High Share. Companies should milk these “cash cows” for cash to reinvest.
- High Growth, High Share. Companies should significantly invest in these “stars” as they have high future potential.
- High Growth, Low Share. Companies should invest in or discard these “question marks,” depending on their chances of becoming stars.
- Low Share, Low Growth. Companies should liquidate, divest, or reposition these “pets.”
Check below!
This strategy can be used for budget planning. The BCG Matrix can be fundamental at times, such as changing the profit margin and generating a greater financial result with less investment.
If budget professionals and managers do not consider making analyses and using this strategy to help, the company risks losing ground to the competition.
Above all, it is essential to know your products and those of the competition and know how they work.
BCG Matrix in Fashion Industry
One way to use this strategy in your fashion brand is to position yourself in the market. In this way, companies are able to explore a variety of opportunities and make a brand that looks into multiple spaces in the market.
In this context, the BCG matrix can be very useful in producing collections, for example, according to the 440 Industry website. The BCG can help fashion brands manage their production. “It is based on the time it will take each product to go through the different adoption volume stages foreseen by the Product Life Cycle model.”
To understand better, check this example:
“As the product is launched into the market, it will be a Question Mark, as it Grows in adoption it will be a Star, once it has achieved maximum adoption, it will be a Cashcow and finally a Dog when it enters its decline stage.”
BCG Matrix & Digital Marketing
The BCG matrix will make the managers discover, in the product portfolio, which of them have the greatest potential to bring returns.
In this way, online sellers often make decisions about which products to promote and which ones do not earn marketing and advertising investments. From this, we can understand the importance of using marketing strategies over star products.
“When you use the BCG Matrix to make marketing investment decisions, the goal should be to create star products and hold on to them. Thus, you will allocate some marketing and advertising to holding on to stars and the rest to star creation”, says Practical Eccmmerce Website.
Analyzing You BCG Matrix
After applying the strategy to your company, it’s time to analyze. Basically, you should set a deadline to re-analyze your products and move their quadrant.
If your strategy fails, the best thing to do is remove the product from the portfolio and save unnecessary expenses. But if the product is classified as a cash cow, the only way forward is to keep it in.
And remember that it takes patience to move your products from quadrants. A question mark rarely turns into a cash cow overnight.
