product-decisions as

Bought for personal use

Bought for business use

Individual or household

Business or purchasing department

Usually small quantities

Often large-scale purchases

More sensitive to price and brand

Focused on value, reliability and total cost of ownership

E.g. iPhone, shampoo, clothing

E.g. photocopier for an office, raw materials for a manufacturer

Branding, emotional appeal, convenience

Functionality, efficiency, cost-effectiveness

• Cash cows are products with a high market share in a mature market (the entire market is no longer growing)

• They generate significant positive cash flow but have low growth potential

• The business invests minimal resources in cash cows, as they provide stable sources of income

• Marketing efforts focus on maintaining market share and profitability

• Cash cows are valuable assets that can be used to fund the development of new products

• Problem child or question mark products have a low market share in a high-growth market

• These products have the potential to become stars if the company invests in their development

• There is often a negative cash flow, as businesses usually invest in problem child products to increase their market share and turn them into stars

• If the investment does not result in growth, the product is usually discontinued

• Marketing efforts focus on increasing market share and brand recognition

• Star products have a high market share in a high-growth market

• The company typically invests in stars to maintain or increase their market share

• These generate significant positive cash flow and have the potential for continued growth

• Marketing efforts focus on building brand recognition and increasing market share

• Stars are valuable assets, and the business should focus on maximising their potential

• Dog products have a low market share in a low-growth market

• They generate little revenue for the company and have no growth potential

• Businesses often move away (divest) from these to focus on more profitable products

• Marketing efforts for dog products are minimal or zero

• The BCG matrix classifies products solely on market growth rate and relative market share

  • Other key factors, such as competition, technological advancements, customer preferences and other industry trends, are ignored

  • This may lead to poor strategic decisions

• A high market share does not guarantee profitability when the market is highly competitive or if the company incurs significant costs to maintain its share

  • E.g. despite controlling a market share of around 50% between them, the three largest airlines in the USA achieve average annual profit margins of less than 5%

• It is based on current market conditions and historical data and does not consider changes in the competitive environment

• It may not identify emerging trends, which are crucial for long-term planning

• It treats each product in isolation and does not account for potential synergies or interdependencies

• In reality, some products may complement each other or benefit from shared resources, which can affect the marketing decisions that may be made

• Identifying market growth rates and market share for each product within a business’s portfolio is likely to take expertise and time

• If market conditions are changing rapidly, regular changes must be made to the positioning of products within the matrix to ensure that appropriate marketing decisions are made

• Generating and screening product ideas, and then designing and developing the product

• The business usually incurs high costs for research and development, marketing research and product testing

• Cash flow is usually negative during this stage, as the company is investing heavily in the product without generating any revenue

• Marketing strategy during this stage is focused on creating awareness and generating interest in the product

• The stage begins when the product is launched

• Characterised by slow sales growth, as the product is still new and unknown to most consumers 

• Cash flow is usually negative as the business usually incurs high costs for promotion, advertising and distribution

• Promotional efforts are focused on creating awareness and generating interest in the product

• Pricing strategies will depend on the nature of the product and the market

  • Price skimming may be used for innovative or high technology products where little competition exists

  • Penetration pricing may be more suited to products being introduced to competitive markets

• The product enters this stage when sales begin to increase rapidly

• The business focus shifts from building market share and increasing production to meeting the growing demand 

• Cash flow usually turns positive during this stage as sales revenue increases and costs are spread out over a larger volume of production

• Marketing strategies focus on differentiating the product from its competitors and building brand loyalty

  • Price skimming tactics may be dropped in favour of longer-term premium pricing for high-end products

  • Promotional activity is likely to increase as customers are encouraged to purchase repeatedly

  • Further distribution channels will be sought to meet increasing demand

• Characterised by slowing sales growth as the product reaches its peak in terms of market penetration

• Cash flow is usually positive during this stage as sales revenue continues to come in and