The BCG matrix

Five products, one pot of money: Every autumn Lena and Marco sit down with the bakery's products and one question: where should next year's money go?

Some of them bring cash in; some of them need it.

In 4.5.1 these products were sorted with a tool from the Boston Consulting Group, the BCG matrix. It asks two questions about every product.

How fast is its market growing? That is market growth (4.1.2): how fast the whole market's sales rise from one year to the next.

How big a slice of that market does the product hold? That is market share (4.1.2). A high share means the product is one of the leading sellers in its market; a low share means bigger rivals sell more.

Two traps on the axes: High share is on the left. The matrix has always been drawn that way, so the two boxes on the left, star and cash cow, hold the products that lead their markets.

The second trap: Growth means the market's growth. A product whose own sales jumped can still sit in a market that is hardly growing. Look at the whole market first, then at the product's slice of it.

Start with the two boxes on the left, where the product leads its market.

Lena's Bakery supplies bread and pastries to cafés and hotels across town (wholesale). New cafés open every year, so the market is growing fast, and Lena's already supplies most of the town's independent cafés.

A star: a high share of a fast-growing market: Wholesale is Lena's star. It earns well, because the bakery is the cafés' main supplier.

But a fast-growing market pulls cash in too: a second cutting machine, longer night shifts at Mill Lane, just to keep up as the market grows. A star earns a lot and spends a lot, so the cash it has left over is often small.

Now the shop loaves. The town buys much the same bread every year, so the bread market grows only slowly. Among the town's bakeries, Lena's sells the most bread (4.1.2), mostly to regulars who come back every morning. The ovens and the shops are already paid for.

A cash cow: a high share of a slow-growing market: The shop loaves are Lena's cash cow. They sell steadily with little new spending: no launch, no new equipment to keep up with the market.

So a cash cow brings in far more cash than it needs. That spare cash is what pays for the bakery's other products.

Stars become cash cows: No market grows fast for ever. When the café market's growth slows, and if Lena's keeps its share, wholesale will need less new spending and become a cash cow.

A star is a cash cow in waiting, as long as it keeps its lead.

Now the two boxes on the right, where bigger rivals sell more.

Lunches first. The town's lunch-to-go market grew 25% in 2025 (4.1.2). But Crumbline plc, the sandwich chain, took 30% of it, and Lena's share slipped to 6.4%.

A question mark: a low share of a fast-growing market: Lunches are a question mark (also called a problem child). The market is worth being in, but Lena's is a small player in it, and nobody knows yet whether it can win a bigger slice.

Winning share costs cash: Winning share takes cash: promotion, a wider menu, more staff at lunchtime. Meanwhile the lunches earn little.

The breakfast range, launched with the Station Road shop this September, starts life in the same box: a growing market and almost no share yet.

Last, the white sliced loaf. The town buys about the same amount of sliced bread each year, and most of it is the supermarket's $1.20 loaf. Lena's sells only a little.

That makes it a dog: a low share of a slow-growing market. A dog earns little cash and needs little. It may just cover its costs, or not quite.

Where the cash goes: Cash cows make the spare cash; question marks need it. The shop loaves pay for the lunches and the breakfast range while they try to win share.

Each label is a snapshot of where a product sits today, as 4.5.1 put it. What to do with each product is a separate decision.

How this comes up: The matrix is set inside a case. A question may ask you to use the BCG matrix on a business's products.

Both halves, every time: Every position needs both halves from the case: how fast the market is growing, and how big the product's share is.

Trap 1: one axis is not a box: One axis is not a box. A fast-growing market alone does not make a star: the lunch market grows fast too, and lunches are a question mark. Name the growth and the share.

Trap 2: profit is not an axis: Profit is not an axis. 'A cash cow because it makes a lot of money' misses the reason. The loaves are a cash cow because they hold a high share of a slow-growing market; the cash follows from that.