Maximize Value Across Your Portfolio: A Strategic BCG Matrix Template

Have you ever heard of the BCG Matrix? If you have been in business for quite some time now, then probably yes. But do you really know what it is all about and what it can offer you? 

Well, in this article, you’ll discover everything you need to know about this strategic planning model, which you may also come across as the Boston Consulting Group Growth-Share Matrix. Here you can also download the BCG Matrix template for free.

What Is The BCG Matrix? 

The BCG Matrix is a business marketing tool developed in the 1970s by Bruce Henderson of the Boston Consulting Group. It remains a crucial pillar in strategic planning today. 

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Why is it considered as such? Because it helps business owners and strategists categorize their products or services into four distinct groups based on market growth and market share. 

Using the BCG Matrix can give you a relatively clear view of your products’ potential so you can decide which of them to discontinue and which to invest in.

What Are the Components of the BCG Matrix?

As already mentioned, this tool divides your products and services into four groups (quadrants). These are:

1. ⭐ The Stars: In this section, the ones with high market growth and high market share fall. 
2. 💸 🐄 The Cash Cows: These are the products with low market growth but high market share. They are the established ones that continue to sell immensely.
3. ❓The Question Marks: Here, you’ll find high market growth but low market share. This often occurs with the newly launched products.
4. 🐕 The Dogs: Finally, in the last category, the dogs have low market growth and low market share. They are also named “the Pets” and refer to products and services that have completed their lifecycle, and it’s better to let them go since they don’t bring profit anymore.

The horizontal axis represents the Relative Market Share (Cash Generation) while the vertical axis refers to the Market Growth Rate (Cash Usage).
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Getting insight into which group a product falls in the Matrix allows you to analyze your product portfolio and decide - and then plan - whether to invest, maintain, harvest, or divest. 

BCG Matrix Examples: Breaking Down The Categories 

So, let’s explore these four categories a bit further with some real-life examples to help you better grasp their role. 

1. Stars (High Growth, High Share)

These are your company’s best performers. You know, the ones you boast about. They are in rapidly growing markets and enjoy a significant market share. 

Typically, stars require significant investment to maintain their position, but over time, as their growth slows down, they tend to become cash cows.

• Example: Think of Apple's iPhone for a second. During its initial boom years it quickly dominated the smartphone market while the industry was growing rapidly, and Steve Jobs’ company invested - and still does - in R&D and promo resources to support and evolve it.

The Ideal Strategy: Invest to maintain or increase market share.

2. Cash Cows (Low Growth, High Share)

On the other hand, cash cows are products already found in mature markets with high market share. 

These continue to bring more profits compared to their production costs despite existing in competitive markets. They are considered an asset to your business because they generate cash flow that you can allocate to other projects. 

• Example: Pepsi has been pioneering the market for decades, despite having competition like Coke. Although the soft drink market isn’t growing much, Pepsi continues to take up its market share and offers massive profits to the popular multinational company.

The Ideal Strategy: Continue doing what has been proven successful for your cash cows. Milk their profits and use the extra funds to support your stars and question marks. 

3. Question Marks (High Growth, Low Share)

Question marks have been launched into fast-growing markets but haven’t achieved and secured a significant market share yet. People may not be familiar with them yet, have not really started to trust them, or can’t discern them from the competition. 

These products need heavy investment to grow in terms of their features’ quality or advertising means, but not all will become stars.

• Example: Tesla’s Cybertruck. Do you remember the amount of memes flooding the internet when it was first introduced? It was a time when electric vehicles were booming, but still the “new kid on the block” - Cybertruck had to prove itself.

The Ideal Strategy: It’s a rather tough decision you have to make. You can either proceed forward with heavy investments in marketing or choose to phase out the product.

4. Dogs (Low Growth, Low Share)

Finally, the dogs have already offered what they could and have now limited growth potential. In addition, they have low market share. 

A rather lose-lose scenario, to be honest. They might break even, but in reality, they don’t promise significant returns.

• Example: Remember the DVD players? They used to be in every house once upon a time. Maybe they still are and may even enter new houses, but let’s face the truth here: in today’s streaming era, who watches a film on a DVD player? There’s still a chance they will come back to join nostalgic trends brought back to life, such as analog cameras, record players or flair pants, but would it be strategic to count on that?

The Ideal Strategy: You should divest your dogs or attempt a reposition if a niche market exists. That’s what happened to Stanley cups - instead of outdoor workers they started targeting pilates moms, and boomed. But that required huge marketing investment and very smart planning.
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Working on your positioning? Check out our strategy case study for some inspo:
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BCG Growth Share Matrix Template

The BCG Matrix has been explained. Its categories have also been explained. And real-life examples have been given. By now, you should have a picture of the tool's purpose and use. 

So, let’s get down to business. Let’s practice with the Matrix using another real-life example. But first, visit the following link and get your template (we’ll ask for an email in return).
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‍BCG MATRIX TEMPLATE FREE DOWNLOAD

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What will you find inside:

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Save a blank BCG Matrix Template on your laptop or copy on your Google Disc for later use. 

How to Use The BCG Template by Promodo:

Step 1. Identify Products/Units:
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Open the Product List page, and insert all the products or business units that you want to analyze.

Step 2. Assess Market Growth Rate:
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A high growth rate means the market is growing quickly, so there’s lots of potential for sales.
A low growth rate means the market is more stable or shrinking, so opportunities for new sales are limited.
You can evaluate market growth by looking at industry reports, forecasting tools, or general demand in your sector. Growth rates over 10% per year are often considered high.

Step 3. Evaluate Relative Market Share:
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High market share means you’re a leader in this market segment and have a big piece of the market pie.
Low market share means competitors dominate, and your product has a smaller slice of the market.
You can calculate market share by dividing your product’s sales by the total sales in the market. For example, if your product generates $1 million and the market is $10 million, you have a 10% market share.

Step 4. Analyze Quadrants:

Go back to the BCG Matrix page and use your insights to determine which products deserve more of your investments, and which are better to let go. 

Ready? Nice! Let’s proceed.

A Case Study Using Promodo’s BCG Matrix Template

For the sake of this example, we will apply the BCG Matrix to Starbucks, the global coffee giant, borrowing some of the brand’s most iconic products and services: its mobile ordering and payment system, the classic brewed coffee, the Teavana retail stores and its relatively recent ventures into new markets like China.

Place these four items on the second page of the template in the Product Name column. Then use the drop-down menu on two other columns to adjust market share and market growth. Use this data for the reference:

(Numbers are hypothetical)

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So, let’s come back to the first page to see where these business units are placed in the Matrix’s quadrants:

• Stars: The Starbucks’ mobile ordering and payment system. Definitely. As mobile ordering grew rapidly, Starbucks invested heavily in dominating the space.
• Cash Cows: The classic brewed coffee. It’s a mature market, but Starbucks holds a large, loyal customer base. 
• Question Marks: Starbucks ventures into new markets like China in the early years. High growth but uncertain dominance. New territories must be conquered, and the outcome isn’t predictable. 
• Dogs/Pets: Starbucks’ Teavana retail stores. Are you wondering where they have been? Unfortunately nowhere anymore. Despite the growing tea market, the stores underperformed and were eventually closed.

How to Use the BCG Matrix Template in Your Business

Now, let’s move to your venture.

• Step 1: Identify Your Products and Services:

First, make a list of all the products and business units that you want to analyze.

• Step 2: Assess the Market Growth Rate

A high growth rate means the market is growing quickly, so there’s lots of potential for sales.

On the other hand, a low growth rate means the market is more stable or shrinking, so opportunities for new sales are limited. You’re facing a mature situation.

How can you evaluate your market growth? By looking at industry reports, forecasting tools, or the general demand in your sector. Growth rates over 10% per year are often considered high. How are yours?

• Step 3: Evaluate Relative Market Share

High market share means you’re a leader in this market segment and have a big piece of the market pie. Well done! 

Whereas, a low market share means that your competitors dominate and your product has a smaller slice of the market. Not the end of the world, but not very good either.

You can calculate your market share by dividing your product’s sales by the total sales in the market. 

• Step 4: Analyze Quadrants

In step 4 you must follow the analysis process as previously presented, and place each business unit in the appropriate quadrant.

• Step 5: Strategize 

Step 5 is the most important part. It’s when having gathered the data that you reach the point of evaluating the situation and decide your next steps. 

Will you invest, maintain, harvest, or divest? And how are you going to do it? This is the time of decision, and some of them may be difficult. But, in business, there is not much room for sentiment, is it? 

For example, you may be forced to discontinue the product that made your company known to the world and help it expand even beyond your wildest dreams. But, life is tough. 
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Would you like to learn more about strategy and marketing? Visit our glossary. 

Is the BCG Matrix As Good As It Seems?

Actually, despite its pros and effectiveness, many have argued against it. There are some disadvantages such as: 

• The matrix doesn’t include the competition.
• The market share does not promise profitability.
• The market growth can be affected by the company.
• Many products can be interdependent.
• Markets that are declining or collapsing aren’t evaluated.

While the model is easy to use, it requires context to be confident enough to base your future decisions on it.

Key Takeaways

The BCG Matrix is an essential tool for your strategic planning because it can analyze which business units are worth further investment, which are doing okay for the time being, and which are candidates for discontinuation. 

By using Promodo’s BCG Matrix Template - you can have your free download here - you can identify your Stars, Cash Cows, Question Marks, and Dogs to effectively decide how to allocate your resources and which products you should and shouldn’t promote. 

Need some help strategizing? Feel free to reach out.

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FAQs

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How does the BCG Matrix work exactly?

The BCG Matrix is a strategic planning model that allows businesses to analyze their product portfolios and decide how to allocate their resources. 

In its essence, the BCG Matrix template represents a graph with four quadrants. In each section fall the products or business units you choose to evaluate each time, depending on their growth rate and market share. 

Why Do I Need a Portfolio Analysis In the First Place?

Simply put, without doing one on a regular basis it would be like proceeding blindly in the competitive market.

A portfolio analysis offers you keen insight into how your products and services perform in the market and what actions you need to take in order to either promote or sustain the “strong” ones and phase out the “weak” ones.

Which Is the Best BCG Matrix Template?

Well, you’ll find several BCG Matrix templates in the market, all designed with the same philosophy. 

However, if you really want a free BCG Matrix template that is effective, you can opt for Promodo’s version. You can get your BCG Matrix template free download with just a click.  

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