What is the Star
Stars in the BCG matrix represent a product with a high market share in the high relative growth market. The products within the star quadrant in the BCG matrix have a strong competitive performance in the market and they have high future potential.
Normally, the star products are enjoying a very high market share position or it has a significant feature as an advantage over the competition like the iPhone before the boom of Chinese android phone.
The stars are the most important category in the company’s portfolio because they are the future of the company. However, the company needs to invest heavily in them to maintain their growth and maximize returns.
Key Points
- Stars in the BCG matrix represent a product with a high market share in the high relative-growth market.
- Since the star products are in the high relative-growth market they will demand more investment to maintain market share.
Business Strategy for a Star
On the downside, the high level of market growth means this product demands more investment to maintain the market share, maximize returns, and sometimes to compete with price. So, having a lot of Star in the company’s portfolio is not a good idea.
However, if the Star product can survive and maintain the market share until the market becomes mature cycle (which is less competitive) the Star product will transform into a Cash Cow that no longer needs a huge investment to compete, but generate high revenue from the high relative market share.
References: What Is the Growth Share Matrix? by the Boston Consulting Group
