Not all products in a business portfolio are equal. Some drive growth, some generate steady profit, and others quietly drain resources. To manage wisely, businesses must learn to categorise their products — and one of the most practical frameworks for this is the BCG Matrix, developed by the Boston Consulting Group in the 1970s.
As management guru Peter Drucker once said:
> “There is nothing so useless as doing efficiently that which should not be done at all.”
In other words: don’t waste time on products that don’t create value.
The Four Categories of Products
The BCG Matrix classifies products based on market growth rate (high or low) and market share (high or low). Here’s how it breaks down:
1. Stars
High market growth, high market share
These are your rising champions. They require heavy investment but can become future cash cows.
Example: The iPhone was once Apple’s “star” — growing rapidly in a booming smartphone market.
2. Cash Cows
Low market growth, high market share
Mature, stable products that generate consistent profits with little need for reinvestment. They “fund” the rest of the business.
Example: Microsoft’s Office Suite — not flashy, but a reliable profit engine.
3. Question Marks (or Problem Children) ❓
High market growth, low market share
These products have potential but are uncertain. They require big investments, and the risk is high — they can either turn into Stars or fall into Dogs.
Example: Electric scooters for ride-sharing companies — a hot market but no guaranteed winners.
4. Dogs
Low market growth, low market share
These products generate little profit and tie up resources. Often best to divest or discontinue.
Example: Blockbuster’s DVD rentals in the streaming era — a declining product in a shrinking market.
A True Story: Kodak’s Missed Categorisation
Kodak dominated photography with its “cash cow” film business. But when digital cameras (a “star” market at the time) emerged, Kodak dismissed them. Instead of investing in the question mark product it had pioneered, it clung to its cash cow. The result? Bankruptcy in 2012.
The lesson: Failing to move resources from cash cows into stars/question marks can kill even market leaders.
Why This Framework Matters
Helps businesses allocate resources wisely.
Highlights when to invest, maintain, harvest, or divest.
Prevents over-dependence on one product line.
Fact: According to Bain & Co., companies that actively manage their product portfolio outperform peers by 30% in long-term shareholder returns.
Quick Exercise: Categorise Your Products
1. List your products/services.
2. For each, ask:
Is my market growing fast or slowly?
Do I hold a high or low share of that market?
3. Place them in the four categories: Stars, Cash Cows, Question Marks, Dogs.
Reflection: Are you putting enough investment into Stars and Question Marks? Are you harvesting Cash Cows? Are you still holding onto Dogs out of habit?
Going Beyond BCG: Other Categories to Consider
While the BCG Matrix is powerful, businesses today sometimes use additional lenses:
Rising Stars – Emerging products with strong early signals.
Niche Players – Small market but loyal following.
Innovation Bets – Future-focused projects not yet in the market.
These extensions give nuance to modern industries where disruption moves quickly.
Final Thought
Not all products deserve equal love. Some need heavy investment, some should be milked, and some should be let go. The art of business is knowing where to place your bets.
As Warren Buffett famously said:
> “The difference between successful people and really successful people is that really successful people say no to almost everything.”
By categorising your products wisely, you say “yes” only where it matters most.
Get Success 