Page 36 - Marketing the Basics 2nd

28 Marketing: the Basics
Managers need a tool to help them make informed decisions with respect to allocating resources.
THE BCG APPROACH
One popular tool is called the BCG Approach. This model was developed by the Boston Consulting Group in the 1970s. Their model assesses the performance of SBUs according to their relative market share and the growth rate (see Figure 2.1). The relative market share indicates the SBU’s market share relative to their largest competitor. The closer the relative market share is to the point of origin on the map, the larger the relative market share the SBU controls. In other words, if an SBU controlled 25 per cent of
20% 18% 16% 14% 12%
Stars
3
5
Question Marks
1 4
10% 8% 6% 4% 2% 0%
Cash Cows
2
Dogs
6
10x 8x 6x 4x 2x 1.5x 1.25x 1.1x
.9x .8x .7x .6x .5x .4x .3x .2x .1x
Low
figure 2.1 Boston Consulting Group (BCG) growth–share matrix
High
Relative market Share
Low
High
Marlet Growth Rate