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How Do I Measure It?: Data Collection Method

The document discusses the Boston Consulting Group matrix, which uses relative market share and market growth to categorize products. It plots these factors on a two-dimensional graph to place products in one of four quadrants: stars, cash cows, question marks, or dogs. Stars have high relative market share in growing markets and should receive investment. Cash cows have high relative share in stagnant markets and generate cash. Question marks have growth potential but weak market share. Dogs have neither strong share nor growth potential. The document also provides a formula for calculating relative market share as an organization's market share divided by its largest competitor's share.

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Sudarshan Gopal
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67 views1 page

How Do I Measure It?: Data Collection Method

The document discusses the Boston Consulting Group matrix, which uses relative market share and market growth to categorize products. It plots these factors on a two-dimensional graph to place products in one of four quadrants: stars, cash cows, question marks, or dogs. Stars have high relative market share in growing markets and should receive investment. Cash cows have high relative share in stagnant markets and generate cash. Question marks have growth potential but weak market share. Dogs have neither strong share nor growth potential. The document also provides a formula for calculating relative market share as an organization's market share divided by its largest competitor's share.

Uploaded by

Sudarshan Gopal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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scale (central to the Boston Consulting Group matrix – see below), it is assumed

that these earnings will grow faster the higher the share.
The reason for choosing relative market share, rather than just profits, propo-
nents argue, is that it carries more information than just cash flow. It shows where
the brand is positioned against its main competitors, and indicates where it might
be likely to go in the future. It can also show what type of marketing activities might
be expected to be effective.
The relative market share metric was first developed in the 1960s but was further
popularised by the Boston Consulting Group in its famous matrix of relative share
and market growth.
In the Boston Consulting Group’s growth-share matrix, one axis represents
relative market share – a surrogate for competitive strength. The other represents
market growth – a surrogate for potential (see previous KPI). Along each dimension,
products are classified as high or low, placing them in one of four quadrants. In the
traditional interpretation of this matrix, products with high relative market shares in
growing markets are deemed stars, suggesting that they should be supported with
vigorous investment. The cash for that investment may be generated by cash cows,
products with high relative shares in low-growth markets. Question mark or problem
child products may have potential for future growth but hold weak competitive posi-
tions. Finally, dogs have neither a strong competitive position nor growth potential.

Market share

High Low
Market
growth High Stars Question marks
rate
Low Cash cows Dogs

Source: Boston Consulting Group (www.bcg.com)

How do I measure it?


Data collection method
Analysis of annual reports or market research that is in the public domain. Bespoke
analysis can also be carried out, if data are more problematic to attain.

Formula
Organisation’s market share
Relative market share (%) ⫽ _______________________________
Largest competitor’s market share

As we can see, the exact measure is the brand’s share relative to its largest com-
petitor. Thus, if the brand had a share of 20%, and the largest competitor had the
same, the ratio would be 1:1. If the largest competitor had a share of 60%, however,
the ratio would be 1:3, implying that the organisation’s brand was in a relatively

134 MARKETING AND SALES PERSPECTIVE

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