Boston consulting group (bcg)
* Matrix is developed by Bruce Henderson of the Boston Consulting Group in the early 1970’s
* According to this technique, business or products are classified as low or high performance depending upon their market growth rate & relative market share.
Relative market share & market growth
To understand the Boston Matrix you need to understand how market share & market growth interrelated.
Market share is the percentage of the total market that is being serviced by your company measured either in the revenue terms or unit volume terms.
Relative market share
The higher your market share, the higher proportion of the market you control.
The Boston Matrix is a model of product portfolio analysis . It is a marketing planning tool which helps managers to plan for a balanced product portfolio.
A business would place each individual product in its product portfolio or product range onto one of the quadrants of the Boston Matrix based on the product's relative market share and the product's market growth in the industry.
Here is an example of Starbucks' Boston Matrix model
Coffee & Packed food: are products that operate in high growth markets and have high market share. They are products that tend to generate high amounts of cash for Starbucks. Meaning that the company will tend to invest money in developing and promotion their coffee and packed food.
Tea: Tea for Starbucks is a product that operate in a high market growth sector, but have low market share. Since Starbucks is more famous for their coffee, their tea represents inferior product quality or marketing to their competitors such as Twanging’s. Knowing that the tea market has high growth, Starbucks could analyze reasons for its low market share and to then develop strategies to gain higher share of the growing tea market.
Mugs: are products with high market share operating in a low growth market. This...