Posted in Marketing and Strategy Terms, Total Reads: 2645
Definition: Growth Share Matrix
It is a model to relate market share with market growth rate of a product or a business unit. It is also called BCG matrix. Market share is of the product or business unit in industry and growth rate is of the industry itself. It was developed by the Boston Consulting Group in 1968. Till then it has been extensively used in order to formulate and implement the business strategy for many companies. It basically categories the product of the companies according to growth rate and market share and puts them into four categories:
Star: The product having high score on both market share and market growth rate comes into this category. They are thought of as the next cash cows for the company.
Cash Cow: The product with low growth rate but high market share fits in this category. Companies prefer their products to be into this category as they keeps on generating enough cash flow for the company.
Dog: The products with low score on both market share and market growth rate fits into dog category. These are least likeable products and they didn’t generate enough cash flow for the company even to meet the breakeven target.
Question Mark: the product with high growth rate but low market share fits into this category. For these product the company is not sure about their future and proper consideration is required for that product for future investment
Example: The BCG matrix HUL products can be as follows:
Star: Lux, Sunsilk can be categorized as star product with high market share and high growth rate
Cash Cow: AXE deodorant is a cash cow with high market share but low growth rate of industry.
Dog: Wheel has come out as a low growth rate and low market share product for HUL
Question Mark: Rin can be put into question mark category with high growth rate but low market share.