Marco wants proof: In 6.4.1 Lena and Marco sorted the bakery's products into four boxes by what they knew. This year Marco wants the figures: for each product, two numbers, and the box they point to.
He starts with the lunches.
Placing a product takes two readings. How fast is its whole market growing (market growth)? And how big is the product's share compared with the biggest seller in that market? Both come from sales figures, with the formulas of 4.1.2.
Placing the lunches in four steps
The market's growth
The town's lunch-to-go market sold $2,000,000 in 2024 and $2,500,000 in 2025.
($2,500,000 − $2,000,000) ÷ $2,000,000 × 100 = 25%
The product's share
Lena's lunches sold $160,000 in 2025.
$160,000 ÷ $2,500,000 × 100 = 6.4%
Against the biggest rival
Crumbline plc holds 30%. Divide Lena's share by the leader's: 6.4 ÷ 30 = 0.21. This is the relative market share. Crumbline sells almost five times as much.
Read the box
Growth of 25% is high. A share about a fifth of the leader's is low. High growth and a low share: the lunches are a question mark.
Where high turns into low: There is no law for where the lines go. A common rule of thumb draws the growth line at about 10% a year, and the share line at a relative market share of 1. At 1 or above, no rival sells more: the product leads its market.
When the case gives words: When a case gives words instead of figures, such as high, medium or declining, use its words. For 'medium', decide which side it is nearer, and say why.
| Relative market share | What it says | Side of the matrix |
|---|---|---|
| Above 1 | The product outsells its biggest rival: it leads the market | High share (left) |
| Exactly 1 | Level with the biggest rival | On the line |
| Below 1 | At least one rival sells more | Low share (right) |
| Lena's lunches: 0.21 | Crumbline sells almost five times as much | Low share (right) |
The market's growth, not the product's: Lena's own lunch sales rose from $136,000 to $160,000, a rise of 17.6% (4.1.2). That is the product's growth, not the market's.
The market grew 25%, faster than Lena's lunches, which is why her share slipped from 6.8% to 6.4%. The side of the matrix always takes the whole market's growth.
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Marco does the same for the other lines that sell today. One table, four products, and each product measured in its own market: the market it really competes in.
| Product line, 2025 | Its market's growth | Lena's share | Biggest rival's share | Relative share | Box |
|---|---|---|---|---|---|
| Shop loaves | Bread from the town's bakeries: $2,250,000 to $2,400,000 = 6.7% | $960,000 = 40% | Goldcrust, Market Square: 36.7% | 40 ÷ 36.7 = 1.09 | Cash cow |
| Wholesale to cafés and hotels | $500,000 to $600,000 = 20% | $240,000 = 40% | A city catering supplier: 20% | 40 ÷ 20 = 2.0 | Star |
| Lunches | $2,000,000 to $2,500,000 = 25% | $160,000 = 6.4% | Crumbline plc: 30% | 6.4 ÷ 30 = 0.21 | Question mark |
| Cakes and pastries | $1,470,000 to $1,500,000 = 2.0% | $240,000 = 16% | Brightmart: 24% | 16 ÷ 24 = 0.67 | Dog |
Reading the table: Growth line at 10%, share line at 1. Wholesale and lunches sit above the growth line; the loaves and the cakes sit below it. The loaves and wholesale sit left of the share line; lunches and cakes right.
One new placing: One placing is new. Cakes and pastries sell steadily, but Brightmart's cake aisle sells half as much again, in a market growing 2%. On the figures, they are a dog.
Draw the grid like this, high share on the left. Lena's four lines: wholesale top left (star), lunches top right (question mark), shop loaves bottom left (cash cow), cakes and pastries bottom right (dog).
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Which market?: Each product is measured in the market its customers choose within. A customer at Kofi's counter is choosing between the town's bakeries, and among them Lena's sells the most bread, as in 6.4.1.
Say which market you used: Measure a product in the wrong market and it can land in the wrong box. So say which market you used, and why its customers would compare those rivals.
Constructing a BCG matrix
- Work out two figures for each product. Its market's growth, and its share against the biggest rival.
- Draw and label the axes. Market growth up the side, high at the top; market share along the bottom, high on the left.
- Mark the two lines and name the boxes. Star top left, question mark top right, cash cow bottom left, dog bottom right.
- Write each product in its box, with its figures. 'Lunches: 25%, 0.21' shows the reader why it sits there.
- If you like, draw each product as a circle sized by its sales. The loaves' $960,000 makes a circle four times as big as wholesale's $240,000.
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The box is not the decision: The matrix says where each product stands. Managing the product portfolio (4.5.1) means deciding what each product gets next year, and where the spare cash goes.
There are four moves.
Four moves for a product
Build
Spend to win share: promotion, a wider range, new equipment. For a question mark worth backing, or a star in a market still racing ahead.
Hold
Spend enough to keep the share, and no more. For a star, and for a cash cow under attack.
Harvest
Spend little and take the cash while it lasts. For a cash cow in a fading market, or a dog that still earns.
Divest
Stop selling it, or sell the line to someone else. For a dog with no job in the portfolio, or a question mark that cannot win.
| Lena's line | Box | The move | Why |
|---|---|---|---|
| Shop loaves | Cash cow | Hold | Goldcrust is only just behind (1.09), so keep the quality and the regulars; their cash pays for the rest |
| Wholesale to cafés and hotels | Star | Build, then hold | The market grew 20%; keeping a 40% share means more night shifts at Mill Lane and, in time, more equipment |
| Lunches | Question mark | Build or divest | Crumbline doubled its share from 15% to 30% in a year; catching up would take heavy spending |
| Breakfast range | Question mark | Build | Launched at Station Road this September, next to the station's commuters |
| Cakes and pastries | Dog | Harvest | $240,000 a year with little new spending, and many buyers take a loaf as well |
| White sliced loaf | Dog | Divest | Few buy it against the supermarket's $1.20 loaf, and nothing else depends on it |
A dog is not a loss-maker: Cakes and pastries are a dog on the figures, yet they bring in $240,000, 15% of the bakery's sales. Dropping them would lose that, and perhaps the loaf that goes in the same bag.
Drop a dog when it neither earns its keep nor helps another product. Some dogs even help by keeping a rival's product off the shelf.
Cash ties it together. The loaves' spare cash cannot fund every question mark at once. With two, the lunches and the breakfast range, Lena's has to choose which to back, and a question mark that is not backed usually slides into the dog box.
A balanced portfolio: Cash cows to pay the bills, a star or two to become the next cash cows, and a few question marks chosen with care (4.5.1). Too many question marks and the cash runs out; none, and nothing replaces today's cash cows.
The products also move. Wholesale becomes a cash cow when the café market slows, as long as Lena's keeps its share (6.4.1).
Marco's table looks exact. Ask where each figure came from, and it is less certain than it seems.
Five things to check before trusting the matrix
It depends on the market chosen
Wholesale holds 40% of the town's café and hotel trade. Count every café in the region and the same $240,000 is a far smaller slice. Same sales, perhaps a different box.
The lines are a judgement
At 1.09 the loaves are only just on the high side. A good year for Goldcrust would move them across the line.
It says nothing about profit
The matrix never asks what a product earns. The lunches' profit is not on Marco's sheet at all, and the dog brings in $240,000.
It treats products as if they stood alone
A customer who buys a cake often buys a loaf. Drop one and the other may suffer.
It is a snapshot of estimates
Rivals do not publish their sales by product, so the city supplier's 20% is Marco's guess. And markets move: Goldcrust's crackers at $1.90 could dent wholesale this year.
What the matrix does well
- Shows the whole portfolio on one page
- Shows which products make cash and which need it
- Points to where the next cash cow must come from
- Quick to draw from figures most businesses have
What it cannot do
- Choose the market for you
- Show profit or cash flow
- Show links between products
- Tell you how the market will move
It starts the argument: The matrix is a quick map of where the cash comes from and where it goes. It does not decide.
Put it beside the profit and cash figures and what the case says about rivals and customers. Then decide, and say which figure you would most want checked.
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How this comes up: The matrix is set inside a long case question about a business's products.
What the case gives and asks
- The table. Each product's market share and market growth, as figures or as words such as high, medium or declining, often beside its profit.
- The long question. Use the table, the case and a BCG matrix to recommend what the business should do with its portfolio, such as which product to remove.
- A shorter question. Construct the matrix from a table: the axes, the four boxes, and each product in its place.
The pattern for a recommendation
- Place every product first. Its box, and the two figures or words that put it there.
- Narrow to the real choice. Rule out the products that clearly stay, in a sentence each, with a reason.
- Argue each candidate both ways. Its box, its profit or cash from the table, and what it does for the other products.
- Decide, with a condition. Name one product, say what would change your mind, and what the data leave out.
Two traps: One product only. Arguing about a single product, however well, skips the choice the question asks you to make. Weigh at least two.
Labels without figures. 'Cakes are a dog' is a start. 'Cakes are a dog, 16% against Brightmart's 24% in a market growing 2%, yet they bring in $240,000' is an argument.
Using Table 1, other information in the stimulus and a BCG matrix, recommend which product line Lena's Bakery Ltd should remove from its portfolio.
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