All around the world, businesses evaluate their offering, be it a product or service, in terms of its value in the market and its potential for further expansion. The allocation of resources is of critical importance since a business has to concentrate its resources in a manner that maximizes growth. This concern is addressed by the BCG Matrix, which conveniently classifies an organization's offerings about the level of market growth and the relative market share.

With the rise of digital solutions, various tools streamline the creation and customization of BCG matrices. One standout option is Xmind AI, which combines a user-friendly interface with advanced analytical capabilities. This article investigates how Xmind AI can assist organizations in making data-oriented decisions by creating a BCG matrix example.

What is the BCG Matrix?

The Boston Consulting Group (BCG) Matrix, which is also referred to as product portfolio matrix, is a model used in business planning to strategize on brand positioning. It offers a pathway for organizations to effectively assess and distribute resources over different product lines or business segments. The matrix categorizes products into four quadrants based on two factors: market growth and relative share.

These dimensions enable a business to assess the strategic position of a given product in marketing, giving it a basis for investing in new products or even dropping non-performing ones. The generation of this template follows a rectangular format consisting of horizontal lines crossed by one vertical line to form four quadrants. The vertical axis is the relative Market Growth of a given product, while the horizontal axis shows the changes in Market Share.

Performance factors indicate every quadrant of the matrix. Products with strong shares in the market and high relative growth rates are the ones that are best to be considered for future investments. Conversely, the products with weak growth and low market shares indicate that those products must be re-evaluated.

Benefits of BCG Matrix

1. Identifies Growth Opportunities: Businesses can uncover products with high market growth potential using this market positioning tool. After identifying such products, they can invest more in them to increase their market share and revenue.
2. Risk Diversification: The BCG Matrix helps companies assess their portfolio for balance to ensure that they are not overly dependent on one product or market segment. This can reduce business risk by highlighting opportunities in different quadrants.
3. Facilitates Strategic Planning: This matrix concisely illustrates the product portfolio, making it straightforward for businesses to discover products that are underperforming in the marketplace. Once businesses showcase the low-performing items, they can determine if they should drop a product completely or keep it.
4. Supports Competitive Positioning: Companies employ this tool to examine the market share their product holds in relation to the competition in the market. After pinpointing the products not performing well in the marketing process, the businesses can revise pricing policies to be more competitive and serve the customers better.

Understanding the Four Quadrants of the BCG Matrix

The BCG Matrix template categorizes a company's products into four quadrants, each highlighting a different strategic focus based on two key factors. Understanding these quadrants is essential for businesses to make informed decisions about resource allocation and product management. Therefore, to make you better equipped for strategic planning, this section delves into each quadrant in detail:

1. Stars

Products in this quadrant have a strong market share in a fast-growing market. These are typically industry leaders with significant revenue potential. The focus should be on maintaining growth and providing huge investments to sustain their leadership position. While Stars consume a considerable amount of cast, they also generate large cash flows, making them a valuable asset for the company. As the market continues, Stars may eventually transition into Cash Cows.

2. Cash Cows

The BCG Matrix includes Cash Cows, which are products that dominate in a market that is growing slowly. These products already have a large market share and have been in the market for a while, and they only need a little investment to keep them successful. The profits from Cash Cows can be used to fund other products that need more investment to grow.

3. Question Marks This quadrant represents the products that exist in fast-growing markets but need a higher market share. These products have potential but need much attention, effort, and investment to grow. They consume a lot of money to develop, and the funding for these investments often comes from the profits generated by Cash Cows. In simple words, Question Marks are high-risk, high-reward products that require careful management and strategic planning.

4. Dogs

The last component of BCG Matrix examples are products in slow-growing markets with a low market share. These products often generate some revenue but have little potential for significant growth. Such products provide modest cash flows but are less likely to reach the Stars level. Due to their limited growth potential, companies usually discontinue products in the Dog quadrant unless they serve a specific strategic purpose.

BCG Matrix Examples and Case Studies

We're now going to look at real-world examples from different companies to help you better understand the application of the BCG matrix. These BCG Growth Share Matrix examples will show how companies use the product portfolio matrix to decide which products are performing well or underperforming.

1. Apple

Apple uses the growth-share matrix to evaluate its extensive product lineup. The company uses the matrix to prioritize investments in Stars like iPhone and MacBook while minimizing investment in older models or underperforming items in the Dogs quadrant.

Products like the iPad and older models fall into the Cash Cows quadrant, generating steady revenue with minimal investment. Meanwhile, products like the Apple Watch and AirPods are categorized as Question Marks, as they are in a growing market but still have a low market share.

2. Tesla

Using the BCG matrix, Tesla evaluates its product portfolio, including all the old and upcoming models. Stars like the Model Y receive significant investment as they dominate the fast-growing electric vehicle market. Older models like the Model S and Model X fall under Cash Cows and provide stable revenue with minimum investment. The Question Marks might include the Cybertruck and Semi-Truck, which show growth potential but currently have a smaller market share. The original Roadster, with limited growth and market share, is categorized as a Dog.

3. Nike

Nike uses the product portfolio structure to evaluate its product range, including footwear and sports equipment. Stars like Nike Running Shoes hold a strong market share in the rapidly growing sportswear market and have received significant investments to maintain their position. Established product lines, such as Nike's classic sneakers and athletic wear, are considered Cash Cows as they require minimal investment.

Products like Nike's new smart wearables and high-tech gear fall into Question Marks because they are part of a growing market but still have limited market share. Some older products, which no longer generate revenue, are placed in the Dogs quadrant.

4. Coca-Cola

To assess its diverse beverage lineup, Coca-Cola uses the BCG matrix template to determine where to allocate resources for optimal growth. Stars like Coca-Cola and Diet Coke, which have the highest sales, have a strong market share in the global soft drink industry. Products such as Sprite, which generate constant sales with low investment needs, are classified as Cash Cows.

Newer entries like Coca-Cola Energy and Coca-Cola Plus Coffee are considered Question Marks, as they hold potential but still have a smaller market share. Lastly, the products with limited growth potential, such as niche beverages, fall under the Dogs quadrant and may eventually be phased out.

5. Maybelline New York

Many makeup brands like Maybelline New York integrate the BCG matrix in their workflow to manage their product portfolio effectively. Their best-selling mascara and foundation lines dominate the market, falling under the Stars quadrant. Other than that, popular products like Maybelline’s classic lipsticks are considered Cash Cows, generating steady income with less investment.

The Question Marks category includes newer offerings, such as skin care or limited edition collections. However, the products with low market share or slow growth are classified as Dogs that might be considered for discontinuation or rebranding.

Creating a BCG Matrix With Xmind AI

After thoroughly understanding the BCG Growth Share Matrix examples, you need an advanced tool to create and customize it. Xmind AI is one such powerful tool that simplifies this process by providing different structures and templates tailored specifically for building product portfolio matrices. You can adjust the matrix layout, add relevant data, and categorize products or services based on their market growth and relative market share.

Think about a scenario where a software development company uses Xmind AI to build a BCG Matrix for its service offerings. The company provides various services, such as custom software development, cloud solutions, AI consulting, and mobile app development. Using Xmind AI, the company easily created a visual representation of its product portfolio, as discussed in the steps below:

Step 1. Login and Create a New Map

After logging in to your Xmind AI account using your credentials or through a Google account, you’ll be directed to the main workspace. Here, click on the “New Map” button to open a New Map window with different BCG templates.

Step 2. Choose the Appropriate BCG Matrix Template

In the New Map window, scroll through the templates gallery and select the BCG Matrix template that best suits your needs. If you prefer more customization, you can opt for the “Blank Template” to design your own structure from scratch.

Step 3. Label the Y-Axis With Market Growth

Once you’re in the BCG Matrix generation interface, write the name of your topic into the central blue block. Detach the nodes connected to this central block and place them around the blue block. For the Y axis, label “Low” at the bottom and “High” at the top to represent the market scale.

To label the Y axis, copy and paste a block at the top of the axis and write “Market Growth” within it. Next, tap on the “High” node and use the “Branch” tool to extend a branch downward, connecting it to the lowest “Low” node. To ensure the branch is a straight line, click on the branch and use the right-side panel to adjust its Start, Line, and End shapes.

Step 4. Label the X-Axis With Market Share

For the X-axis, label "High" on the left side and "Low" on the right side to represent the relative market share. Then, copy and paste a block at the left side of the axis and write "Market Share" within the node.

Next, click on the "High" node and use the "Branch" tool to create a branch until the "Low" node forms the X-axis. Afterward, repeat the steps mentioned in step 3 to customize the appearance of the branch in line form.

Step 5. Divide the Matrix into Four Quadrants

After positing the axes in the BCG matrix template, the next step is to divide the matrix into four quadrants. Create a node for each of the four quadrants and label each node accordingly. Place the "Stars" node at the top left and the "Question Marks" node at the top right. Afterward, keep the "Cash Flows" node in the bottom-left and the "Dogs" node in the bottom-right quadrant.

Step 6. Assign Services to Each Quadrant

Assign your services to the appropriate sections of the BCG matrix based on market growth and market share. For example, "Customer Software Development" could be placed in the "Stars" quadrant. "AI Consulting" might belong in the "Question Marks" quadrant, while "Cloud solutions" could be part of the "Cash Flows" quadrant. Finally, "Mobile Development" might be assigned to the "Dogs" quadrant. To do this, add a node within each quadrant and label it with the relevant service.

Step 7. Customize the Quadrants With Different Styles

When the BCG matrix is in place, assign unique colors to each quadrant. For this purpose, tap on each quadrant node and navigate to the “Format and Style” section. From the extended list of style options, you can apply distinct colors to differentiate the quadrants, add borders, and modify the text style to enhance the overall appearance.

Step 8. Incorporate Quadrant Visuals

To enhance your BCM matrix with the quadrant visuals, click within each quadrant node and go to the "Emoticon" icon to expand a list of stickers. From the drop-down list, select the appropriate category of visuals and choose the desired sticker to add to the node.

Step 9. Share BCG Matrix With Collaborators

When you're satisfied with the look of the matrix, press the "Share" button at the top-right of the interface. From the newly appeared dialogue box, enter the email addresses you want to invite. You can also adjust the sharing settings to specify whether the recipients can view, access, or edit the matrix.

Advantages of Using Xmind AI for BCG Matrix Creation

In the previous section, we explored how to create a BCG matrix template using Xmind AI. We saw that the tool offers a user-friendly interface for building the matrix, along with powerful customization capabilities, stickers, and collaboration features. Now, let’s look at other exceptional features of Xmind AI that complement the BCG matrix generation process:

1. Comment Feature: One of the standout features of Xmind AI is its comment feature. This tool allows users to leave comments on specific nodes in the BCG template. By adding comments, team members can share feedback, ask questions, or provide clarifications directly within the context of the matrix.
2. AI Copilot: Xmind AI can automatically generate parts of your matrix based on the input you provide through Copilot's generate-on-demand feature. Moreover, the AI-powered Copilot provides insights or additional information within the matrix automatically.
3. Pitch Mode: In this mode, users can format their BCG matrix into presentation-ready format. This feature automatically organizes the matrix into a more visually appealing and structured layout, making it easy to present to stakeholders.
4. Add Equations: To enhance your analysis, you can add equations to your mind maps and BCG matrices. With this feature, companies can easily integrate mathematical formulas, calculations, or any other quantitative data into nodes, making it easier to represent complex data alongside your strategic insights.

Conclusion

To conclude the discussion, integrating BCG Matrix templates within a company or organization is essential for making informed strategic decisions. This article explored the product portfolio framework in detail, as well as highlighted its use cases in different business contexts. Xmind AI stands out as an effective tool for creating BCG matrices, providing features such as AI-assisted insights, customizable features, and collaboration options.