What is Dog in the BCG Matrix
Dogs in the BCG matrix represent the business unit (or a product) that has a low relative market share in a slow-growth market. Dogs may be aged and waning, the company needs to refresh the product or divest the dog from the portfolio.
The BCG Matrix, also known as the Boston Matrix or the Growth-Share Matrix, created by the Boston Consulting Group, provides strategies for analyzing products based on growth and relative market share.
The growth-Share Matrix (also known as Product Portfolio Matrix, Boston Box, BCG Matrix, Boston Matrix, BCG Analysis, Portfolio Chart) the BCG is a graph created by Bruce D. Henderson for Boston Consulting Group in 1970 Group, which helps companies analyze their business unit or product lines.
The dog is located at the bottom right quadrant in the BCG growth-share matrix. The vertical axis of the BCG matrix represents the growth rate of a product and its growth potential in a given market. The horizontal axis of the BCG matrix represents the market share of a product compared with other rivals.
How does the BCG Matrix Works?
The BCG matrix is a portfolio planning model used to analyze the products in a company’s portfolio based on their growth and relative market share. The BCG matrix classifies a business portfolio into four categories depending on the attractiveness of the sector (growth rate of that sector) and competitive position (relative market share).
- Stars: High Growth, High Share. Companies should invest in these “stars” as they have high future potential.
- Cash cows: Low Growth, High Share. Companies should harvest from these “cash cows” for cash to reinvest.
- Question marks: High Growth, Low Share. Companies should invest in or discard these “question marks,” depending on their chances of becoming stars.
- Dogs: Low Share, Low Growth. Companies should liquidate, divest, or reposition these “dogs.”
According to the BCG matrix model, as an industry matures and its growth rate slows down, a business unit becomes a cash cow or a dog, which is determined solely by whether it became the market leader during a period of strong growth. According to this matrix, firms can be classified as high or low depending on their industry growth rate and relative market share.
Dogs in the BCG Matrix
As you can see in the BCG matrix, all of the products in the lower right quadrant have a small share of the stagnant “dog” market. If the market grows slowly (or not at all), our product will be in the “low market growth” line.
Dogs are not generating much profit for the company since they have a low relative market share and low growth. Normally, the dogs are aged and waning products, However, sometimes the dog may be made the break-even point, but just break-even, not a profit (or just a little profit).
Dogs are the exact opposite of stars some are aged products, the company needs to decide to refresh that product, divestment, or any retrenchment strategy. However, if you notice that the market is going into a decline soon, a divestment strategy is a recommended choice.