It can also be calculated by determining the average revenue growth of the leading firms. The industry growth rate can be easily found through free online sources. Relative market share is given on the x-axis. Relative Market Share = Product’s sales this year/Leading rival’s sales this yearįor example, if your competitor’s market share in the automobile industry was 25% and your firm’s brand market share was 10% in the same year, your relative market share would be only 0.4. We use Relative Market Share in a BCG matrix, comparing our product sales with the leading rival’s sales for the same product. Market share is the percentage of your company’s total market that is being catered to, measured either in revenue terms or unit volume terms.
Step 3: Calculate the relative market share Therefore, defining the market accurately is an important prerequisite for better understanding the portfolio position. For example, if we would analyse Daimler’s Mercedes-Benz car brand in the passenger vehicle market, it would end up as a dog (it holds less than 20% relative market share), but it would be a cash cow in the luxury car market. Step 2: Define the marketĪn incorrectly defined market can lead to a poor classification of products. Therefore, defining the unit is necessary. The choice of the unit impacts the whole analysis. Step 1: Choose the productīCG matrix can be used to analyse Business Units, separate brands, products or a firm as a unit itself. We shall understand the five processes of making a BCG matrix better by making one for L’Oréal in the following sections. Now we will see on what basis and how that classification is done. So far, we know products are classified into four types. However, seasonal and experimental products like Pepsi Real Sugar, and Mtn Merry Mash-up can be inserted in this section. Dogs – As of now, there isn’t any product line that falls in the dogs section of Pepsico’s BCG matrix.fall in the question marks section of the Pepsico’s BCG matrix. Question Marks – Since it’s a mystery whether the diet food and soda industry will boom in the future and will Pepsico’s products will find their place or not, Diet Pepsi, Pepsi Max, Quaker, etc.Other stars are Aquafina (the biggest selling mineral water brand in the USA), Tropicana, Gatorade, and Mountain Dew. Stars – Even though Pepsi’s share in the market has been reduced to 8.4%, it’s still the star for Pepsico because of its brand equity.Cash Cows – With a US market share of 58.8%, Frito Lay is the biggest cash cow for Pepsico.
Here are the four quadrants of Pepsico’s growth-share matrix: The company has perfected its product mix over the years according to what’s working and what’s not. A perfect example to demonstrate the BCG matrix could be the BCG matrix of Pepsico.
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