The marketing market in recent years has developed quite bustling and exciting. Not only because of the impact of the internet boom, but above all, the explosion of technology, specifically effective marketing support tools. The BCG Matrix is one of the most frequently mentioned and used tools by marketers. So what is the BCG Matrix? What are the benefits of this matrix as well as how to build an effective matrix? The answer will be right in the article below of VSM.

BCG Matrix? Components of BCG Matrix

Learn about what is the BCG Matrix?
Learn about what is BCG Matrix?

BCG Matrix Overview

The BCG Matrix is a tool, a fairly familiar term in today’s marketing field. But understanding its nature and characteristics as well as using it properly, not all marketers understand it correctly. So what is BCG Matrix? What are the features of this tool?

What is BCG Matrix?

Before learning the concept of what is BCG Matrix? Then you need to understand what BCG means? BCG is an acronym by the person who created this matrix in 1968, the Boston Consulting Group. Introduced technology in 1968 with many different names such as growth matrix, BCG matrix, Boston matrix, .. but the value it brings is still preserved and developed stronger.

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The BCG Matrix  is understood as a useful tool that provides businesses with an “ready-made mold” to put the data of their business and company and analyze products in the direction of growth and market share. It is the result that the BCG Matrix  returns, businesses and companies will have an overview to detail about the products they are trading, which are good, are selling well to take advantage of to develop development strategies. develop later.

Thus, customers can understand in a simpler way that the BCG Matrix  will analyze for you two main factors in business. It is the product’s market share in what position in the market and the development prospects of potential customers present in the market. Owning these two results will help businesses avoid wrong investment strategies that lead to losses.

What is the role of the BCG Matrix?

What is BCG Matrix? Then this is a useful tool in business, in marketing. If you want to understand more about the benefits of this tool, let’s learn some of the benefits of BCG Matrix with VSM:

  • The BCG Matrix helps businesses allocate investment capital for each product accurately, especially increasing capital for products with high market share.
  • The results that BCG Matrix gives businesses are statistically almost error-free based on the data provided by businesses.
  • How to do, build BCG Matrix is extremely simple, results are obtained quickly.

Advantages and disadvantages of BCG Matrix

Any tool on the marketing market today has two sides that are advantages and disadvantages. So what are the advantages and disadvantages of the BCG Matrix tool?

Pros and cons of BCG Matrix tool
Advantages and disadvantages of the BCG Matrix tool

Advantage

Rated by experts as a useful tool that is always chosen by marketers when analyzing to devise an effective business strategy. So what are the advantages of the BCG Matrix tool?

  • Very simple to use. Enterprises only need to provide the data required by the matrix to receive a reasonable investment allocation index for reference.
  • The given matrix data helps businesses have an overview of their business strategy. From there, identify unreasonable plans and periods for timely adjustment.
  • The data of the supply matrix is distributed in each stage of product development, helping businesses to reap high profits, invest in science, in the right place.

Cons

Besides the outstanding advantages that VSM mentioned above, the BCG Matrix  also has some disadvantages as follows:

  • The matrix classification is quite simple, does not attract customers, especially fastidious marketers, requiring high professionalism.
  • The matrix only evaluates product market share as well as growth percentage, but not other factors, especially environmental factors. Therefore, the business results obtained should be further analyzed to make an accurate decision.
  • Calculated matrix data sometimes has errors

The above disadvantages of the BCG Matrix can be completely overcome if businesses and companies organize a professional and meticulous marketing personnel system.

What are the main components that make up the BCG Matrix?

The BCG Matrix is like business matrices, building other algorithms, it also has a shape and is made up of many parts. So what are the main components that make up a BCG Matrix?

The main components that make up the BCG Matrix
Main components that make up the BCG Matrix

The BCG Matrix is composed of four main components: the star SBU, the dairy SBU, the question mark SBU, and the dog SBU. So how do the above components perform their functions and tasks? Discover the following with VSM:

SBU star

The first major component that makes up the BCG Matrix is the star SBU. This is a component to represent products with high competitiveness and good profit for businesses in the market.

Therefore, the products currently in the star corner, businesses should pay attention to to have a huge capital investment to help it grow quickly. If it grows rapidly to a certain limit, it is likely to convert into a dairy SBU to maintain a large share of the market.

SBU cows

The next quadrant of the BCG Matrix is the dairy SBU. So what are the characteristics of this component we need to understand?

When the product is in the dairy SBU box, it is showing that these are products with a relatively low growth rate but in exchange for a large market share. Thus, this product has been and is gaining a firm foothold in the market and is trusted by consumers. Businesses can invest in these products to make a profit.

SBU question mark

So what is the question mark SBU component representing on the BCG Matrix?

The products that appear in the quadrant of the question mark are showing that it is having a high growth rate but a limited market share. Thus, this component is in stark contrast to the dairy SBU. The products here have growth potential but low investment leads to inability to compete in the market. One is that the business chooses to take a risk to invest, the other is that the business withdraws its investment to preserve capital.

SBU dog

The final piece to complete the BCG Matrix that VSM wants to introduce to customers is the SBU dog puzzle.

The products appearing in this puzzle are falling into the market with many difficulties, the market share is quite low and the investment sources of enterprises for the product are not much. They invest here only to get their capital back and then choose to withdraw completely.

With the classifications and characteristics of the above 4 components, it can be summed up that if your products appear in the star SBU, the dairy SBU, you should continue to invest strongly. On the contrary, in the remaining two pieces, investment should be limited or not.

So in the above article, VSM has provided customers with the most important information to answer what is the BCG Matrix? As well as understand the characteristics and components of this useful tool. If you have any questions or concerns, please contact us immediately for more detailed advice.