Overview
The BCG matrix plots each product on two axes — market growth (how attractive the market is) and relative market share (how strong your position is) — producing four types. It's a tool for portfolio decisions: which products to fund, which to milk for cash, which to fix or watch, and which to drop.
The core logic is cash flow. Cash cows fund the stars and question marks; the goal is to keep tomorrow's cash cows coming without over-investing in dogs.
When to use it
Managing a portfolio of products or business units and deciding where to invest, hold, or exit.
How to use it
Stars — high growth, high share
Market leaders in growing markets. Invest to keep them ahead; they become future cash cows.
Cash cows — low growth, high share
Leaders in mature markets. Milk them for cash to fund the rest; invest little.
Question marks — high growth, low share
Weak position in an attractive market. Decide: invest to build share, or exit.
Dogs — low growth, low share
Weak position in a dull market. Usually divest or wind down.
Balance the portfolio
Use cash cows to fund stars and the best question marks; prune dogs.
Worked example
A consumer-goods firm maps its brands. Its detergent is a cash cow — dominant in a flat market — generating the cash that funds a fast-growing but sub-scale eco brand (a question mark it decides to back) and a declining air-freshener (a dog it discontinues). The matrix turned a sprawling portfolio into three clear capital decisions.
Common pitfalls
- Market share and growth are crude proxies for competitive strength and attractiveness.
- The 'dog' label can prematurely kill a niche product that's quietly profitable.
- It ignores synergies between products and external forces.
Frequently asked questions
What are the two axes?
Market growth rate (how attractive the market is) and relative market share (how strong your position in it is).
What's the main strategic message?
Use the cash from cash cows to fund stars and promising question marks, and stop pouring money into dogs.