BCG Matrix — Relative Market Share and Market Growth Rate
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It allows you to analyze the market position of your company's products.
It is commonly referred to as the BCG Matrix or the Growth-Share Matrix.
The horizontal axis represents Relative Market Share (RMS).
The vertical axis represents Market Growth Rate (MGR).
The midpoint of the Relative Market Share line is set at 1.0 as the baseline.
The midpoint of the Market Growth Rate line is typically set at 0.
(This can be adjusted if needed.)
The calculation formulas for RMS and MGR are as follows:
Now, calculate the RMS and MGR for each of your company's products and plot them as circles on the chart. Currently:
If sales volume is high, make the circle larger.
If sales volume is low, make the circle smaller.
After plotting all the circles, draw lines through each center to divide the areas as follows:
Star Product = Both RMS and MGR are above the center
Question Mark Product = RMS is low but MGR is high
Cash Cow Product = RMS is high but MGR is low
Dog Product = Both RMS and MGR are low
Star Business
A promising business that receives continuous investment due to high growth rate and market share. (Growth business)
Cash Cow Business
A business with high market share that generates consistent revenue, but has low growth potential. (Optimization business)
Question Mark Business
A new business. It has relatively low market share but high growth rate. Depending on the company's actions, it could become a Star or fall to the Dog position. If you decide to invest early, significant investment capital is required to increase relative market share.
Dog Business
A business where further growth is difficult and profit margins and cash flow are poor. :( Business exit)
And since a single product does not stay in one quadrant forever — it follows its own cyclical pattern —
do not become complacent just because your product is currently a Cash Cow.