The BCG Matrix is a classic strategic analysis tool for evaluating products and business units.

This model offers a quick view that makes planning and prioritization easier. That’s why it continues to be used in management and marketing environments, where it helps organize the business portfolio and compare product lines.

Of course, it doesn’t replace other analyses, but it does provide a clear read to kick-off internal discussions and ground criteria. Which is why it’s worth understanding what the BCG Matrix is, how it works, and what its quadrants are. In the following lines we explain all of that, along with examples and suggestions on when to use it.

What Is the BCG Matrix and How to Use It: Quadrants, Advantages, and Limitations

What Is the BCG Matrix?

The BCG Matrix is a strategic analysis model that classifies products or business units according to market growth and relative market share. In this way, it helps you understand which lines have greater potential, which generate cash, and which require adjustments.

This approach was developed by Boston Consulting Group (BCG) in 1970 and popularized in 1973 after publication. Its main objective is to support strategic decision-making by interpreting each product’s position within the portfolio.

What Is the BCG Matrix Used For?

It serves as a tool to analyze a business portfolio and turn it into clear decisions within a corporate strategy.

In general, the BCG Matrix helps to:

• Evaluate the product portfolio in an orderly manner, based on its market position.

• Prioritize investments and commercial efforts where there is greater potential.

• Decide which products to push, maintain, or retire based on performance and outlook.

• Facilitate internal communication, since it simplifies complex decisions for executive and commercial teams.

• Allocate resources strategically, avoiding the spread of budget and time across lines that don’t contribute.

• Support mid- and long-term planning, aligning the portfolio with your company’s strategy.

• Identify growth opportunities before a product loses competitive relevance.

Put differently, the BCG Matrix tells you which products are sustaining the business, which need a boost, and which no longer justify the effort.

How Does the BCG Matrix Work?

This model works as a two-axis map that places each product or business unit based on two variables:

• Market growth (vertical axis): indicates how fast the market where the product competes is expanding.

• Relative market share (horizontal axis): compares your share against the leading competitor to understand your competitive strength.

With these two data points, the BCG Matrix is divided into four quadrants and each product is placed where it belongs.

From that position, you can make a strategic read of where the product stands. This helps you understand how solid its competitive position is and what role it plays within the portfolio (e.g., whether it’s growing or sustaining results).

The 4 Quadrants of the BCG Matrix

The four BCG quadrants are categories that let you organize the product portfolio in a clear, easy-to-identify way. Each one summarizes a typical situation and helps you interpret it quickly within the analysis.

The four quadrants are:

• Star: products with high potential, well positioned in growing markets.

• Cash Cow: consolidated products that sustain results in stable markets.

• Question Mark: products with growth opportunities that have not yet achieved a strong market position.

• Dog: products in low-growth markets that also have low share versus competitors.

Quadrants are usually represented in graphic organizers to clearly visualize each product’s position within the portfolio.

The most common is a 2×2 matrix like the following:

BCG Matrix Examples

To bring the BCG Matrix down to earth, imagine a software company’s portfolio analysis with four products:

• Core suite. It leads its category and competes in an already stable market, so it falls into the Cash Cow quadrant. The ideal move is to maintain it and optimize profitability.

• New app with high demand. It’s in a growing market and has already achieved good share, placing it as a Star product. Therefore, it’s worth investing to sustain growth and consolidate position.

• New feature in a booming market. It operates in a dynamic environment but hasn’t yet gained enough traction, entering the Question Mark category. Here, you should assess whether to push it (marketing, improvements, pricing) or whether it’s not worth it.

• Legacy tool. It has limited presence in a market that no longer shows growth, which places it in the Dog quadrant. You should evaluate whether to retire it, simplify it, or keep it only if it serves a specific function.

The key is to use the information as support for analysis, not as an automatic decision.

Advantages and Limitations of the BCG Matrix

The BCG Matrix is a useful portfolio analysis tool as a starting point, but it does have limitations.

That’s why it’s essential to know the pros and cons:

Advantages

• Lets you read the portfolio at a glance.

• Simple, fast, and easy to apply.

• Helps prioritize resources and investments.

• Makes it easier to decide what to push, maintain, or retire.

• Improves internal communication with a clear visual schema.

• Provides context about the product life cycle.

• Works as a starting point for corporate strategy.

• Helps detect imbalances in the portfolio.

• Enables product comparisons with consistent criteria.

Limitations

• Reduces market reality to a few variables, which can hide important nuances.

• Doesn’t directly evaluate profitability or margins by product.

• Relies on growth and share estimates that aren’t always exact.

• Analyzes each product in isolation, without considering potential synergies.

• Can fall short in very dynamic or highly competitive markets.

The BCG Matrix isn’t meant to solve everything on its own, but you can complement it with RFM analysis or other approaches to get a more complete read. That way you can better leverage its advantages and interpret its limitations more judiciously before deciding.

Common Mistakes When Using the BCG Matrix

Applying the BCG Matrix can lead to faulty conclusions if it’s not done correctly.
Below are some common errors to avoid:

• Using it as the only decision tool. The BCG Matrix isn’t a full analysis system—it’s a support. Deciding solely with it can lead to simplistic conclusions.

• Not updating market data. Using outdated growth or share figures distorts the real placement of products.

• Classifying without strategic context. A product might be well placed in the matrix and still not fit the business goals or corporate strategy.

• Mis-measuring relative share. Comparing against the wrong competitor or using fuzzy metrics can shift the quadrant read.

• Ignoring differences across sales channels. A product’s performance can vary a lot by channel, and the matrix won’t reflect those differences unless you analyze them properly.

Keep these mistakes in mind to better interpret results and avoid rushed decisions.

When to Use the BCG Matrix

The BCG Matrix is helpful when you need to organize information and gain perspective before acting.

More specifically, you can use the Boston Consulting Group growth matrix when:

• You’re about to start strategic planning to set priorities and focus efforts.

• You need to conduct a portfolio analysis and organize products with a common criterion.

• You must make investment decisions (especially when allocating resources among several options).

• You want to cross the portfolio with profiles of potential customers to understand which lines attract each type.

• You have to evaluate products or business lines before launching, scaling, or restructuring.

• You need to define messages and commercial actions by quadrant using the AIDA framework.

Used at the right time, the BCG Matrix will help you clarify priorities and focus efforts.

Conclusion

The Boston Consulting Group Matrix helps you understand each product’s role in the business. That’s why it’s a well-established strategic analysis tool used to gain a clear, structured view that facilitates decision-making.

The key to success is applying it judiciously and complementing it with other approaches when the context calls for it.

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Frequently Asked Questions

What is the BCG Matrix?

The BCG Matrix is a strategic analysis tool for organizing a portfolio of products or business units into comparable categories. Its readout is based on market dynamism and competitive strength.

What are the BCG Matrix quadrants?

The BCG Matrix quadrants are Star, Cash Cow, Question Mark, and Dog. These categories describe each product’s role within the portfolio based on its competitive position and market dynamism.

What is the BCG Matrix used for?

The BCG Matrix helps organize the portfolio, prioritize resources, evaluate products, and support strategic planning. The tool shows each line’s relative performance before you decide.

What is an example of a BCG Matrix?

An example is classifying four products: a category leader in a stable market as a Cash Cow; a strong product in an expanding market as a Star; a product with potential but weak positioning as a Question Mark; and a lagging product as a Dog.

Is the BCG Matrix still useful today?

Yes, as a foundational tool in strategic analysis. It works best when used with up-to-date data and complemented with other models that better capture business complexity.

Sources:

Boston Consulting Group

Business strategy