Boston Consulting Group model. Boston Matrix, cows and dogs in marketing

At one time, the creation of a matrix by Bruce Henderson allowed BCG to break out into the leaders of the strategic consulting market in the United States, which worried McKinsey quite thoroughly. BCG portfolio analysis became so popular that the McKinseys began to look for their own, similar, but differentiated solution, which was the creation of a matrix, which later became known as the “McKinsey-GE matrix”. The main difference was that BCG consultants used only two variables - market share and market growth, while McKinsey decided not to limit themselves to them. But I will talk about McKinsey's solution in the following articles, now let's move on to the BCG matrix.

The matrix itself seems to have been encountered by everyone who was interested in marketing issues and was involved in the development of a marketing strategy. And, despite the fact that today it is subject to fair criticism, the BCG matrix remains one of the main tools for portfolio analysis and planning in developing a strategy.

Let's analyze its classic version, and later - modified by us, modern.

So, classical method BCG is based on the Markowitz portfolio theory, and its main goal is to achieve optimal profit while reducing risk, by investing only in those business segments that are necessary to achieve goals. This type of business analysis, like any other strategic development, is also based on SWOT analysis, the descriptive conclusions of which are used to build the matrix.

The methodology is based on three observations of Henderson:

1. The first we now know as the experience/learning curve: when relative market share doubles, relative costs decrease by 20%. Relative here is the ratio of a business unit (product) to its competitor's market share.

In our experience, such cost reductions are not observed in classical e-commerce, moreover, with the growth of the market and market share, costs increase. An explanation will be given below.

1. The obvious point today is that young markets are growing rapidly, so they require investments in production and marketing, and mature markets require less investment. Those. young markets are attractive but more risky.
2. It is not profit that needs to be optimized, but free funds. Later, Goldrath would call it the management of the rate of revenue generation. This is difficult for domestic entrepreneurs. Russian business continues to keep records using the cost reduction method.

After analyzing the markets, opportunities and threats of the company in each of them, the company makes decisions on the diversification of funds. An illustration of the solution is usually such a diagram.

BCG Matrix

The main meaning of this matrix is ​​that, without stars in your portfolio, you will not get cash cows. And if you don't invest in kids, you won't get any stars.

Based on your company's current strategy, you make your portfolio management decisions - low-risk investments in stars and cows, or high-risk, but more promising investments in children and rising stars.

All this seems far from the modern medium or small Russian business and inapplicable in working life, but this is not so. Most businesses manage their portfolio of services or products in one way or another.

• Our Gai.Company is consulting, training, advertising, and production.
• A car wash is coffee, washing, polishing, and tire fitting.
• An online store is, at a minimum, managing a portfolio of goods, although it happens that a store makes money on a service or delivery. Or, for example, the Audiomania company, which manages the Audiomania online store, the Boffo online store, the Audiomania and Boffo offline stores, and they also started releasing their own brand acoustic systems ArsLab.

Digital-BCG. BCG matrix in a new way

In December 2017, as part of consultations for online furniture and sporting goods stores, we noticed that a) it is difficult for us to calculate market shares and market growth for these customers; b) but we have accurate data on the volume of demand for goods that we can get from Yandex.Wordstat; c) we know the number of competitors from Yandex.Direct.

Classic online stores engaged in resale, unlike brick ones, practically do not know how to create demand, but only satisfy the existing one. The existing demand comes mainly from search engines, when customers type in the specific names of products or categories they want to purchase.

May.Company analysts have proposed the following solution, which allows you to estimate and predict the volume of demand predictively, to understand the competitive potential of ready demand.

We offer the following modification of the BCG matrix:
A) Take data on the frequency of your product in Yandex.Word Selection https://wordstat.yandex.ru/;


C) And the number of competitors according to your keyword https://yandex.ru/search/ads?text=&lr=213
Pay attention to the regional affiliation of requests! Look at the region codes in Yandex!



And evaluate the potential of your portfolio in terms of competition on the Internet.

Please note that the labels on the axes have changed. The action program itself is described in the picture.

Matrix BCG + Digital

In this way, it is also possible to predictively evaluate the feasibility of investing in contextual advertising of services.

• Dogs— if there are few requests for your product, and there are many competitors in Yandex.Direct. With a small number of requests, the rates will be high. If you have the opportunity to invest somewhere else, then you should think about such an opportunity. These products have been in storage for a long time.
• Children (questions)- if there are few requests, but there are almost no competitors. Traffic is going to be cheap, plus you can take advantage of early demand analysis.
• Stars- if there are few competitors, and the frequency is high. Run and invest before the market gets fed up and competitors can't.
• cows- the main part of the market, for which experts in contextual advertising are fighting, there are many requests, many competitors.

Our first offer to the retailer is that without introducing stars and children into the assortment, without developing them, you can miss the appearance of cows. Secondly, looking at the new matrix, we assumed that the marginality of the products of the “children” and “stars” groups should be higher than the marginality of the “cows” group.

Our assumption was based on the following:

1. With an increase in market share for most Internet merchants, relative costs do not decrease, because they are forced to pay for the return of buyers every time.
2. Among the costs, the most expensive are a) order processing and c) order acquisition (SRO).
3. For retailers with well-established processes, the cost of processing an order is marginal, i.e. it is almost impossible to reduce it.
4. However, SRO tends to zero with properly organized marketing and assortment management.
5. Those. the only factor by which we can reduce the relative costs of these retailers is the cost per order (CRO).
6. SRO with an auction payment model contextual advertising the less, the fewer competitors.
7. Less competitive products have lower relative CROs and higher margins, but may be less in demand.
8. The problem of lower demand for products of the “children” group can be solved a) by additional promotion, c) by increasing the number of similar products in the assortment of the store.
9. We also noticed that the products of the “children” group are usually not maintained in a constant amount in the warehouse, unlike the products of the “cow”. Those. even the demand that exists is not satisfied.

Indeed, it is widely known that additional products (for example, to the phone - films, key chains, etc.) have a higher margin than the main product. The same profit from a laptop bag can be more than the profit from the laptop itself.

However, most online merchants have a skewed assortment towards high-demand, but low-margin products. And buyers seeking to purchase low-demand goods are forced to spend time searching or buying them in Chinese online stores.

Similar situations arise when you are looking for a spare battery or Charger to a recently purchased camera.

Often, even if you find such "baby" products in online stores, they have a vague description, vague delivery methods and dates, and are generally vaguely sold.

We did not find stores positioned on the sale of goods from the “children” group.

BCG vs ABC analysis

We discovered the reason for this almost on the day of the presentation of the results of the analysis. The manager of the company responsible for the assortment of the online store said that this is contrary to their ABC-XYZ analysis, and that the Stars and Children products essentially fall into the B and C product categories.

We were asked to indicate the criteria by which the ABC-XYZ analysis of the assortment is carried out. It turned out that this retailer uses the criteria “turnover in the number of goods” and “turnover in rubles”.

After analyzing the situation, we came to the following conclusions:

1. ABC analysis can only be used if there is no seasonality in demand.
2. Similar analysis criteria are used by a large number of retailers.
3. This does not take into account marginality or profit from a group of goods.
4. In fact, this was a limitation, in terms of TOC.
5. By removing this restriction and shifting the emphasis in assortment management, we will increase the profit of the online store and increase ROMI.

Case: digital-BCG in e-commerce

Our client was one of the leading distributors in the sports equipment segment, who approached us with the aim of increasing the profits from the online store division. One of the limitations of TOC was that buyers could only respond to demand by receiving sales data and doing ABC analysis. At the same time, the company's marketing drew attention to the fact that for all products of group A there is fierce competition with high auction and promotional rates, i.e. ROMI from such products is significantly lower.

As a result, a decision was made to increase the “stars” and “children” groups in the product portfolio, which, in fact, contradicted the classic ABC analysis, since This type of analysis is based on cost control. But such a decision, from the point of view of TOC, allowed to increase the rate of income generation. The range has been changed to a large number spare parts and accessories.

Please note that the leaders of online trading Sportmaster and Decathlon do not have the ability to quickly change the trading range. Our client took full advantage of its strengths as a dealer, given the weaknesses of its giant competitors.

According to the results of February compared to January 2018, ROMI increased by 12%.

Even more opportunities for predictive analysis based on digital data are provided by a methodology called the “McKinsey-GE matrix”. We will try to write about this in future articles. Work with the retailer continues.

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The BCG Matrix is ​​a tool for strategic portfolio analysis of the market position of goods, companies and divisions based on their market growth and market share. Such a tool as the BCG matrix is ​​currently widely used in management, marketing, and other areas of the economy (and not only). The BCG matrix was developed by the Boston Consulting Group, a management consulting group, in the late 1960s under the direction of Bruce Henderson. It is to this company that the matrix owes its name. The Boston Consulting Group Matrix was one of the first portfolio analysis tools.

Why do you need a BCG matrix for a company? Being a simple but effective tool, it allows you to identify the most promising and, on the contrary, the “weakest” products or divisions of the enterprise. Having built a BCG matrix, a manager or marketer gets a clear picture, on the basis of which he can decide which goods (divisions, assortment groups) should be developed and protected, and which should be eliminated.

Construction of the BCG matrix

Graphically, the BCG matrix represents two axes and four square sectors enclosed between them. Consider the phased construction of the BCG matrix:

1. Collection of initial data

The first step is to make a list of those products, divisions or companies that will be analyzed using the BCG matrix. Then for them you need to collect data on sales and / or profits for a certain period (say, for the past year). In addition, you will need similar sales data for a key competitor (or a set of major competitors). For convenience, it is desirable to present the data in the form of a table. This will make them easier to handle.

The first step is to collect all the initial data and group them in the form of a table.

2. Calculation of the market growth rate for the year

At this stage, you need to calculate the annual increase in sales (revenues) or profits. Alternatively, you can calculate both the increase in revenue and the increase in profit for the year, and then calculate the average. In general, our task here is to calculate the growth rate of the market. For example, if 100 units were conditionally sold last year. goods, and this year - 110 units, then the market growth rate will be 110%.

Then, for each analyzed product (division), the market growth rate is calculated.

3. Computing Relative Market Share

Having calculated the market growth rate for the analyzed products (divisions), it is necessary to calculate the relative market share for them. There are several ways to do this. The classic option is to take the sales volume of the analyzed product of the company and divide it by the sales volume of a similar product of the main (key, strongest) competitor. For example, the sales volume of our product is 5 million rubles, and the strongest competitor selling a similar product is 20 million rubles. Then the relative market share of our product will be - 0.25 (5 million rubles divided by 20 million rubles).

The next step is to calculate the relative market share (relative to the main competitor).

4. Construction of the BCG matrix

At the fourth last stage, the actual construction of the matrix of the Boston Consulting Group is carried out. From the origin we draw two axes: vertical (market growth rate) and horizontal (relative market share). Each axis is divided in half, into two parts. One part corresponds to low values ​​of indicators (low market growth rate, low relative market share), the other corresponds to high values ​​(high market growth rate, high relative market share). An important question to be solved here is what values ​​of the market growth rate and relative market share should be taken as central values ​​dividing the axes of the BCG matrix in half? The standard values ​​are as follows: for the market growth rate - 110%, for the relative market share - 100%. But in your case, these values ​​\u200b\u200bmay be different, you need to look at the conditions of a particular situation.

And the final action is the construction of the BCG matrix itself, followed by its analysis.

Thus, each axis is divided in half. As a result, four square sectors are formed, each of which has its own name and meaning. We will talk about their analysis later, but for now it is necessary to put the analyzed goods (divisions) on the field of the BCG matrix. To do this, sequentially mark the market growth rate and the relative market share of each product on the axes, and draw a circle at the intersection of these values. Ideally, the diameter of each such circle should be proportional to the profit or revenue corresponding to this product. So you can make the BCG matrix even more informative.

Analysis of the BCG matrix

Having built the BCG matrix, you will see that your products (divisions, brands) ended up in different squares. Each of these squares has its own meaning and a special name. Let's consider them.

The field of the BCG matrix is ​​divided into 4 zones, each of which has its own type of product/division,
development features, market strategy, etc.

STARS. They have the highest market growth rates and hold the largest market share. They are popular, attractive, promising, rapidly developing, but at the same time require significant investment in themselves. That's why they are "Stars". Sooner or later, the growth of “Stars” begins to slow down and then they turn into “Cash Cows”.

CAIRY COWS(aka “Money Bags”). They are characterized by a large market share, with a low rate of its growth. Cash Cows do not require expensive investments, while bringing a stable and high income. The company uses this income to fund other products. Hence the name, these products literally "milk". WILD CATS (also known as "Dark Horses", "Problem Children", "Problems" or "Question Marks"). They have it the other way around. The relative market share is small, but the sales growth rate is high. It takes a lot of effort and expense to increase their market share. Therefore, the company must conduct a thorough analysis of the BCG matrix and assess whether the “Dark Horses” are capable of becoming “Stars”, whether it is worth investing in them. In general, the picture in their cases is very unclear, and the stakes are high, which is why they are “Dark Horses”.

DEAD DOGS(or "Lame ducks", "Dead weight"). They are all bad. Low relative market share, low market growth. Their income and profitability are low. They usually pay for themselves, but nothing more. There are no prospects. Dead Dogs should be disposed of, or at least their funding stopped if they can be dispensed with (there may be a situation where they are needed for the Stars, for example).

BCG Matrix Strategies

Based on the analysis of goods according to the matrix of the Boston Consulting Group, the following main strategies of the BCG matrix can be proposed.

INCREASE MARKET SHARE. Applied to "Dark Horses" in order to turn them into "Stars" - a popular and well-selling item.

KEEPING MARKET SHARE. Suitable for "Cash Cows" as they bring good stable income and it is desirable to maintain this state of affairs as much as possible.

REDUCING MARKET SHARE. Perhaps in relation to “Dogs”, unpromising “Difficult Children” and weak “Cash Cows”.

LIQUIDATION. Sometimes the liquidation of this line of business is the only reasonable option for "Dogs" and "Difficult Children", which, most likely, are not destined to become "Stars".

Conclusions on the BCG matrix

Having built and analyzed the matrix of the Boston Consulting Group, a number of conclusions can be drawn from it.

Advantages and disadvantages of the BCG matrix

The BCG matrix, as a portfolio analysis tool, has its pros and cons.

Let's list some of them.

Advantages of the BCG matrix:

• thoughtful theoretical background(the vertical axis corresponds to the life cycle of the product, the horizontal axis corresponds to the effect of scale of production);
• objectivity of the estimated parameters (market growth rate, relative market share);
• ease of construction;
• clarity and clarity;
• great attention is paid to cash flows;

Disadvantages of the BCG matrix:

• it is difficult to clearly define the market share;
• only two factors are evaluated, while other equally important ones are overlooked;
• not all situations can be described within the 4 studied groups;
• does not work when analyzing industries with low level competition;
• the dynamics of indicators, trends are almost not taken into account;
• the BCG matrix allows you to develop strategic decisions, but says nothing about tactical moments in the implementation of these strategies.

The figure below shows the Boston Matrix advisory group, in this variant using indicators of the relative market share ( X axis) and relative market growth rate ( Y-axis) for individual evaluated products.

Boston Consulting Group Matrix

The range of change in relative indicators lies in the range from 0 to 1. It is worth saying that for the market share indicator, in this case, an inverse scale is used, i.e. in the matrix it varies from 1 to 0, although in some cases a direct scale can also be used . The growth rate of the market is determined for some time interval, say, for a year.

This matrix is ​​based on the following assumptions: the greater the growth rate, the greater the development opportunities; the larger the market share, the stronger position organizations in competition.

The intersection of these two coordinates forms four squares. If the products are characterized by high values ​​of both indicators, then they are called "stars", they should be supported and strengthened. True, the stars have one drawback: since the market is developing at a high pace, the stars require high investments, thus "eating up" the money they have earned. If the products are characterized by a high value of the indicator X and low Y, then they are called "cash cows" and will be generators Money organizations, because they do not need to invest in product and market development (the market does not grow or grows slightly), but there is no future behind them. With a low value of the indicator X and high Y products are called "difficult children", they must be specially studied in order to establish whether they can turn into "stars" with certain investments. When as an indicator X, and the indicator Y have low values, then the products are called "losers" ("dogs"), bringing either small profits or small losses; they should be disposed of whenever possible, if there are no good reasons for their preservation (possible renewal of demand, ᴏᴛʜᴏϲᴙ tends to socially significant products, etc.)

With the exception of the above, a more complex form of the considered matrix is ​​used to display negative values ​​for the change in sales volume. There will be two additional positions on it: "war horses" that bring in little money, and "dodo birds" that bring losses to the organization.

Along with the visibility and apparent ease of use, the Boston Consulting Group Matrix has certain disadvantages:

1. difficulties in collecting data on market share and market growth rate. It is worth saying that to overcome this shortcoming, qualitative scales can be used that use such gradations as more, less, equal, etc.;
2. the matrix of the Boston Consulting Group gives a static picture of the position of strategic economic units, types of business in the market, on the basis of which it is impossible to make forecast estimates like: "Where will the studied products be located on the matrix field after one year?";
3. it does not take into account the interdependence (synergistic effect) of individual types of business: if such a dependence exists, this matrix gives distorted results and a multi-criteria assessment must be carried out for each ϶ᴛᴏ direction, which is done when using the General Electric (GE) matrix

Boston Matrix Characteristics of the BCG matrix

• Stars— develop rapidly and have a large market share. Needless to say, rapid growth requires strong investment. Over time, growth slows down and they turn into "Cash Cows".
• cash cows(Moneybags) - low growth rates and large market share. They do not require large investments, they bring high income, which the company uses to pay their bills and to support other areas of its activities. Material published on http: // site
• Note that dark horses(Wildcats, difficult kids, question marks) - Low market share but high growth. They require large funds to maintain market share, and even more so to increase it. Due to the high capital investment and risk, it is extremely important for company management to analyze which dark horses will become stars and which ones should be eliminated.
• Dogs(Lame ducks, dead weight) - low market share, low growth rate. Generate enough income to support themselves, but do not become sufficient sources to finance other projects. We need to get rid of the dogs.

Disadvantages of the Boston Matrix:

• The BCG model is based on a fuzzy definition of the market and market share for business industries.
• Market share value is overestimated. Many factors that affect the profitability of the industry are overlooked.
• The BCG model breaks down when it is applied to industries with a low level of competition.
• High growth rates - ϶ᴛᴏ is far from the main sign of the industry's attractiveness.

Bibliographic description:

Nesterov A.K. BCG matrix [Electronic resource] // Educational encyclopedia site

The BCG matrix is ​​a two-dimensional model for analyzing competition, this scheme is used to assess the competitive situation. It was developed by the Boston Consulting Group and is also known as the Growth-Market Share Matrix. This most widely used analysis tool for modern management was created by Bruce Henderson, founder of the Boston Consulting Group.

BCG matrix examples

The BCG matrix is ​​constructed as follows. The horizontal axis shows the relative market share (the ratio of the company's market share to the market share of the leading company). The vertical axis shows indicators of market growth rates, i.e. growth consumer demand characterizing the attractiveness of the market.

The quadrants of the BCG matrix are called: cash cows, stars, question marks (also called difficult children and wild cats for this quadrant), and dogs.

BCG matrix example:

And one more example:

Construction of the BCG matrix

BCG matrix consists of four quadrants. Market growth rates vary from 0 to 30%. The dividing horizontal line corresponds to the 15% level. The methodology also allows for alternative growth rates depending on the market.

Relative market share is defined as the ratio of a company's market share to that of its largest competitor. The leftmost value of the relative market share scale corresponds to the case when the sales volume of the leader is 10 times higher than the sales of the second largest competitor.

The dividing vertical line corresponds to the sales volume of the second most important competitor, and the far right point corresponds to the value of the relative market share equal to 0.1 (the company's sales volume is 10% of the leader's sales volume).

BCG matrix divided into four quadrants, each containing a different company.

Dairy cows.

These are companies with a high market share in a slow growing market. They are highly profitable, realizing economies of scale, and do not require investment.

These are leaders in a rapidly growing market. Their profitability is high, but they need investments to maintain their leading position. When the market stabilizes, they will turn into cash cows.

Question marks / difficult children / wild cats.

These are companies with a low market share in a rapidly growing market. They are in a weak position and have a high need for financial resources.

These are companies with a small share in slow-growing markets. Usually they are unprofitable and need additional investments to maintain their positions. "Dogs" are supported by large firms if they are associated with their activities, for example, carry out warranty repair their products.

Using the BCG matrix in the enterprise

BCG matrix implies that, as a rule, companies go through a full cycle. They start as "question marks", then, if successful, become "stars", become "cash cows" when the market stabilizes, and end up as "dogs". This is the basic loop.

Also, the path of the company may change depending on the actions of management and competition. So question marks may not become stars, but fail and turn into dogs. Stars, as a result of certain innovations and changes, can return to the position of question marks, and not go into the category of cash cows, similar metamorphoses can be done with a cash cow that becomes a star after modernization. Dogs are the worst to change, and in the case of successful changes in the company, they can only go into the category of question marks.

Based on the BCG matrix, the strategies of companies can change in accordance with the standard strategies of this model.

Depending on which quadrant a particular firm falls into, the BCG matrix allows you to predict its strategic behavior and choose a specific strategy.

BCG Matrix Strategies:

• the stars are looking for investments to expand production and output, that is, to maintain or increase the share of business in this market;
• cash cows strive to maintain their market share with all their might, they are ready to direct the excess of finance to the development of other business areas and research and development;
• question marks need targeted investments to move to the stars, or maintain their existing market share, or are forced to reduce this business;
• dogs are forced to be liquidated unless there are some special reasons for their preservation.

Graphically, the strategies of the BCG matrix can be represented as follows:

Strategies in their location correspond to the quadrants of the BCG matrix.

BCG matrix on the example of an enterprise

It should be noted that the BCG matrix at the enterprise is also used in the portfolio analysis of the enterprise. Those. the same matrix and analysis model is used, but applied to internal business lines in a separate analyzed company.

BCG matrix at the enterprise is built on the same principle, but instead of a company, goods manufactured by an enterprise can be analyzed, let's consider this with an example.

Let's build a BCG matrix for the company OOO "Kashtan", which sells electricity household appliances, repair, delivery and installation. At the same time, equipment within the company is divided into electronics: TVs, media centers, DVD players, etc.; and household appliances: stoves, refrigerators, washing machines. The matrix is ​​constructed as follows. The company has been selling electronics for a long time and has most of its income from this group of goods, therefore we put it in the quadrant of dairy cows. The sale of household appliances is actively developing within the enterprise and the profitability of this area is growing - this is a star. The prospects for a new direction - repair of equipment - are not clear, therefore we attribute it to the upper right quadrant of the BCG matrix - this is a wild cat or a question mark. Delivery and installation is a related service and cannot be turned into a serious line of business, but without it, the operation of the enterprise will be difficult. This is a dog - the lower right quadrant of the BCG matrix.

In the May issue of the magazine, we will talk about the BCG matrix - a marketing tool used when introducing products and services to the market. We will consider the algorithm for constructing this matrix, draw conclusions from the results of the analysis, and use a practical example to form an optimal portfolio of additional services provided by an autonomous institution.

The BCG Matrix (BCG) is a tool for strategic analysis and marketing planning. It was created by the founder of the Boston Consulting Group, Bruce D. Hendersen (the abbreviation is derived from the name of the group) and is used to analyze the relevance of a product or service or the stage of the life cycle in which the organization itself is located, based on the dynamics of a particular market and the share occupied by the organization in it .

The BCG matrix will help an autonomous institution determine which additional paid services need to be developed and maintained, and which services it is advisable to refuse, since they do not bring the desired income.

The matrix displays the market growth rate (vertical axis) and relative market share (horizontal axis) along the axes. Estimates for these indicators allow you to classify a product or service, highlighting their possible roles for the organization.

Basics of construction and interpretation of the matrix

The BCG matrix (shown below) is divided into four quadrants, each containing the products and services of the institutions under study (or the institutions themselves).

The Cash Cows quadrant includes organizations with a high market share in a slow growing market, as well as those products and services that have a large market share but have a low rate of sales growth. Such organizations are highly profitable, do not need investments, and such services bring good income, which can be directed to the development of other quadrants.

"Stars" are leaders in a rapidly growing market. Their profitability is high, but they need investments to maintain their leading positions. When the market stabilizes, the "stars" will turn into "cash cows".

"Question marks" (otherwise "difficult children", "wild cats") are organizations and services that occupy a small share in a rapidly growing market. They have weak positions therefore they have a high need for funding.

The Dogs quadrant contains organizations and services that have a small share of a slow growing market. They are usually unprofitable and need additional funding to maintain their positions. So, "dogs" can be supported by large organizations if the former are associated with the activities of the latter (for example, they carry out warranty repairs of their products).

The BCG matrix implies that organizations and services typically go through a complete life cycle. They start as "question marks", then become "stars" when successful, become "cash cows" when the market stabilizes, and end their cycle as "dogs".

However, the path of the organization may change depending on the actions of management and the influence of the competitive environment. In particular, "question marks" may not become "stars" but fail and turn into "dogs". In turn, "stars" as a result of certain changes may return to the position of "question marks", and not move into the category of "cash cows". Similar metamorphoses can occur with a "cash cow" that will become a "star" after modernization. "Dogs" are the worst to change - if successful, they can only go into the category of "question marks".

Thus, based on the analysis using the BCG matrix, an organization can change its strategy. Depending on which quadrant a particular institution falls into, it is possible to predict its strategic behavior.

The BCG matrix allows you to choose from four strategies:

1. "Stars" are looking for additional financing necessary to expand their presence in a particular market (increasing the scale of production, the volume of services provided). That is, the task here is to maintain and increase the market share.

2. "Cash cows" are striving with all their might to maintain their market share, they are ready to direct the surplus of finances to the development of other areas and the conduct of scientific research and development.

3. "Question marks" need targeted financial investments to move to the "stars" or maintain the existing market share. Otherwise, the institution will have to reduce this direction.

4. "Dogs" are forced to be liquidated, if there are no special reasons for their preservation.

Building a BCG matrix on the example of a medical institution

Currently, most medical institutions are able to introduce and provide paid services, and the range of these services often differs. Using the example of a municipal hospital, we will consider the following paid services:

1) dental;

2) paid preventive examinations;

3) X-ray room services;

4) ultrasound examinations;

5) laboratory services ( general analyzes blood and urine, blood sampling from a vein, biochemical analysis of blood);

6) endoscopy (gastroscopy, colonoscopy);

7) physiotherapy (massages);

8) food academy.

Analysis steps

The construction of the BCG matrix takes place in six stages. First - collection of necessary information(sales data).

Name of service	Sales volume for 2014, rub.
Dentistry
Preventive checkups
Ultrasound
Laboratory
Endoscopy
Physiotherapy
Nutrition Academy

At the second stage, it is sales growth rate calculation.

Name of service	Sales volume, rub.		Volume of profit, rub.		Growth rate, %		Change factor	Growth rate in the matrix
Dentistry
Professional examinations
Ultrasound
Laboratory
Endoscopy
Physiotherapy
Nutrition Academy

Further market share is calculated occupied by this or that service (the third stage). To do this, you need to know the sales volumes of the main competitors of the municipal hospital for each specific service. Suppose, after analyzing the collected data, the institution determined that its services occupy the following market shares:

Name of service	Sales volume, rub.	Market share, %	Market share in the matrix
Dentistry
Preventive checkups
Ultrasound
Laboratory
Endoscopy
Physiotherapy
Nutrition Academy

Fourth stage - building a BCG matrix by sales volume. Knowing the relative market share of the service provided and the growth rate of the market (sales volume), the institution can determine the place of each service in the BCG matrix and, accordingly, in its portfolio of proposals. The corresponding quadrant should reflect the name of the service, sales volume and total sales per group. After analyzing the data obtained, it is possible to determine how balanced the organization's portfolio is, correctly prioritize the development of services and highlight key areas for the institution.

		Name	Sales volume, rub.	Name	Sales volume, rub.
		"Question Marks"		"Stars"
Market Growth Rate				Endoscopy
				Nutrition Academy
		"Dogs"		"Cash Cows"
		Dentistry		Ultrasound
		Professional examinations		Laboratory
				Physiotherapy
		Market share

Fifth stage - building a BCG matrix by profit. An analysis of this indicator makes it possible to judge the possibility of initial funding and further financial support for new services of the institution, and also helps to prioritize the support of certain types of services.

		Name	Volume of profit, rub.	Name	Volume of profit, rub.
		"Question Marks"		"Stars"
Market Growth Rate				Endoscopy
				Nutrition Academy
		"Dogs"		"Cash Cows"
		Dentistry		Ultrasound
		Professional examinations		Laboratory
				Physiotherapy
		Market share

Finally, at the sixth stage, a final analysis is carried out, conclusions are formulated and develop (correct) the strategy of the institution.

		"Question Marks"	"Stars"
Market Growth Rate		1) starting point for new services; 2) high growth rate of sales; 3) requires large investments in support and development; 4) low rate of return in the short run	1) leader of a growing market; 2) high growth rate of sales; 3) high level arrived; 4) further growth requires significant funding
		"Dogs"	"Cash Cows"
		1) low profit margin (or unprofitability); 2) limited opportunities for sales growth; 3) new service a failed, or falling market service;	1) the leader of a stagnating market; 2) high level of profit; 3) further growth is practically impossible; 4) the cost of holding positions is lower than the profit received
		Market share

Analysis results

According to the data obtained during the construction of the BCG matrix, the following can be identified:

1. In the position of "Stars" are the services of endoscopy and nutrition academy. And this means that they occupy a relatively large share of the offer among the paid medical services provided by the hospital, with a fairly high rate of development. The institution should support and strengthen this area, not reduce, but possibly increase investment in it.

The best resources of the organization (personnel, scientific developments, funds) should be allocated to these areas. Services-"stars" are future stable source of cash for the institution.

2. Ultrasound, laboratory research and physiotherapy procedures take the position of "cash cows". That is, these services have a stable position among all the offers of the institution, they are the main generators of profit. These areas are represented by a fairly large assortment, but are characterized by a negative growth rate.

It does not require large investments - only to maintain the current level of sales. The institution may use income from the sale of such services to develop their promising areas- "stars" or "question marks".

3. Finding x-ray diagnostics in the "question mark" quadrant indicates that this service is in transition - it is beginning to lose its relative share among hospital services. Activities in this quadrant require large investments in order to grow in line with the market and strengthen their position in it.

When any direction falls into this quadrant, the institution must decide whether whether there are now sufficient resources for the development of the service. If there are funds, they are directed to strengthening the key advantages of the service, intensively increasing its market share. If the organization does not have sufficient resources, the service does not develop.

4. Services in the position of "dogs" include preventive check-ups and dentistry. This quadrant focuses on low market share services in slow growing or stagnant markets. These areas usually bring little profit and are unpromising for the organization. However, this is not the case in our case. These services are core business and should not be withdrawn from the market. They bring significant income, but their demand is low(at least on a paid basis). Therefore, the management of the institution should think about the current situation and take the necessary measures (for example, reduce the cost of the service).

Thus, an organization's ideal portfolio of proposals should consist of two groups:

1) services capable of providing the institution with free financial resources for investment in development ("stars" and "cash cows");

2) services that are at the stage of implementation or growth, in need of funding and capable of creating the basis for the future stability and sustainability of the organization ("question marks").

In other words, the services of the first group provide the current functioning of the organization, and the services of the second group - its future income.

Key takeaways for the healthcare facility

The construction of the BCG matrix allows us to draw the following conclusion: in the example under consideration, the service portfolio is quite balanced. But the institution needs to develop new directions and strengthen the position of new products - "question marks".

More detailed conclusions are formulated in the table.

		"Question Marks"	"Stars"
Market Growth Rate		Services have a rather small share in the offer portfolio. Since the future stability and sustainability of the organization may depend on them, they need to be supported, funded and developed.	The institution has quite a few "stars". However, they are such popular types of services that they provide good profitability, which increases every year. These areas need to be supported. In addition, it must be remembered that over time, the services of an X-ray room (today's "question marks") may move into this group. Otherwise, the creation of new types of services should be considered.
		"Dogs"	"Cash Cows"
		First of all, you need to pay attention to dental services, which bring a good income, but due to their high cost, the number of customers is decreasing. Therefore, here it is necessary to adjust the cost to attract a new audience, which will allow the service to move into the group of "cash cows"	The main focus of support should be on physiotherapy services
		Market share

The BCG matrix suggests next set of next steps establishments on the market:

1. Services in the Stars quadrant should be preserved and strengthened.

2. If possible, expand the range of paid medical services from the "Dogs" quadrant. This will put them in the "Question Marks" or "Cash Cows" category.

3. Services located in the "Cash Cows" zone must be tightly controlled - to monitor the change in their market share and growth rates of sales volumes.

The change in the portfolio of services in this example is mainly associated with the displacement of previous methods of diagnosis and treatment. modern methods applied using high-tech equipment purchased by the institution. Most likely, such a policy has developed under the influence of competition, since the list of services for which a municipal hospital has a low growth rate in sales is offered by almost all medical institutions. Therefore, a more thorough study of the needs of hospital clients (through surveys, questionnaires and other methods) is necessary. And the old tactic, when a well-formed set of services is offered, no longer justifies itself.

The considered portfolio of proposals allows us to conclude that at this time the institution uses a strategy of mass undifferentiated marketing. That is, the hospital, ignoring differences in target audience segments, addresses the entire market with the same services. At the same time, the emphasis is not on how the needs of individual consumer groups differ, but on what these needs have in common. As a result, the hospital provides services that are perceived positively by the widest possible range of consumers. But if a similar strategy is chosen by other medical institutions, this leads to tougher competition and a decrease in income. Small segments are also lost.

Thus, in order to maintain a stable market share and develop paid medical services, an institution needs to adhere to a more thoughtful marketing policy.