They’re usually recently introduced products with sound commercial prospects. Usually found in a high-growth industry, question marks require significant investment to maintain or increase market share. Question Marks show high growth but command low market share and are located in the upper right quadrant. Returns on cash cows usually exceed the market growth rate and generate self-sustaining cash flow. The cash these products generate can be invested elsewhere, so a company is wise to milk the cash cow as long as possible.

They are found in the lower-left portion of the quadrant, and these products/brands typically command a relatively large market share in a mature and slow-growth industry.Ĭash cows require little investment and are typically leading, well-established products in mature markets. Stars tend to generate greater ROI than inhabitants of the other three quadrants.Ĭash Cows exhibit low growth but command high market share. They generate significant income and account for a significant percentage of the market share. A company should invest more in stars, as they are well-established products or brands in high-growth markets. Stars are found in the upper left quadrant of the matrix.

Stars exhibit high growth and command high market share. The four cells of this matrix are designated stars, cash cows, question marks, and dogs. The horizontal axis of this matrix represents relative market share, while the vertical axis represents the market growth rate. The BCG matrix is divided into four quadrants and is based on two parameters – relative market share and the market growth rate.

To calculate the relative market share of a product, divide its market share by the market share of the product’s largest competitor.

To use the BCG matrix, it’s important that a company assess its products or business units based on certain parameters.

For example, it can help manufacturing companies gauge the market potential of their product portfolios and determine which products should be their focus and which should be discontinued.

This matrix can be applied to many different types of businesses.

The BCG Matrix includes four categories: stars, cash cows, question marks, and dogs.The BCG matrix is divided into four quadrants and is based on two parameters, relative market share, and market growth rate.

How to calculate bcg matrix