Lastly, the sour candies neither generate too much business, nor require too much of your attention. An example of a ‘Question Mark’ product of the Coca-Cola company can be ‘Fanta’, it shows the same characteristics as the bubblegum candy. According to the BCG matrix it is your ‘Question Mark’ product- a low share product in a high growth industry. It is only highly popular in one of the localities that you service. You have sold approximately 40 candies per week on and off, not going upwards of 40. It has the potential to become a ‘Star’, but hasn’t performed well.
You were not keen on keeping this product, but you decided to give it a chance.
It was introduced only because the supplier is your friend. Next you notice that bubblegum, though having the potential to become a new favourite, doesn’t seem to progress much. Continuing with the example of Coca-Cola company, the Kinley bottled water is one of the ‘Star’ offerings. This candy according to the BCG matrix is your ‘Star’- the high growth, high share asset. You get good incentives from your supplier, and it has a lucrative selling price to cost price ratio. It has grown from 300 sales of the candy per month to almost 350 sales per month. It started with 10 candies per week, and soon boomed, consistently topped the charts, and because of how actively you promoted it, you are now selling approximately 80 candies per week, and counting. You are trying your best to promote this candy because you get an extra discount from your supplier of this candy. Next, you see that the apple candies are rising fast in sales, and are becoming popular. Simplifying the technical terms, we can say that the BCG matrix is useful in identifying how your company’s various businesses are performing by measuring how fast they are growing and how much market share they currently have (and can potentially capture).
It’s also referred to as the growth-share matrix since the X-axis is a measure of the relative market share, and the Y-axis is a measure of the market growth rate. In essence, it was created to provide a deeper understanding of the market share, and growth potential of a product/a brands. The BCG matrix is an efficient tool used by companies to prioritize and manage their many businesses. And with this piece, we’ll try and understand why companies use BCG Matrix with examples of a few brands to drive the point home. In 1970, at the end of the hippie culture was born the BCG matrix. Far from ideal, this was the lawless land in which a knight in shining armour, Mr Bruce Henderson, the founder of Boston Consulting Group (BCG) rode in on his noble steed. Companies did not have a common metric of measurement to manage their multiple businesses. Once upon a time, long before we could employ technology to sort our messes for us, existed a land of chaos, and manual sorting.
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