Growth Share Matrix

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Growth Share Matrix

• How to use and create this strategic chart

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Overview

• Growth/Share Matrix was developed by a leading
  consulting firm and is an approach to product
  portfolio planning.
• Examines two variables relative market share and
  market growth.
• The growth share matrix highlights product
  categories in relatively strong and relatively
  weak market positions. The same approach might
  be used for comparing a single product companys
  market share to its competitors in a given
  market.

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How does it work?

• Examines each individual product in your
  portfolio and places it onto the matrix. If you
  wish, you can plot the products of your rivals to
  give relative market share.
• Products are positioned in the matrix as circles
  with a diameter proportional to their sales
  revenue.
• Works by classifying products (or businesses) on
  the basis of their market share relative to that
  of their competitors and according to the rate of
  growth in the market as a whole.
• The goal is to offer guidance in terms of
  developing appropriate strategies for products
  and in maintaining a balanced product portfolio.

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Two Dimensions

• Horizontal axis relative market share - measure
  of the product categories strength in the market.
  
• Market Share is the proportion of the market that
  the firm has captured.
• Firms Sales/Total Market Sales
• The X axis scale is reverse log
• Vertical axis market growth rate - measure of
  market attractiveness

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Growth Share Matrix


Source www.euromonitor.com (http//www.euromonit
or.com/pdf/CT-BEIERSDORF.pdf)
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The 4 Quadrants
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Analysis of Growth/Share Matrix

• By dividing the matrix into four quadrants, four
  categorizations can be distinguished.
• Stars - Stars are high growth businesses or
  products competing in markets where they are
  relatively strong compared with the competition.
• Cash Cows - Cash cows are businesses or products
  with low-growth but with a relatively high market
  share.
• Question marks - Question marks are businesses or
  products with low market share but which operate
  in higher growth markets.
• Dogs - Businesses or products that have low
  relative share in unattractive, low-growth
  markets
• Market strategies will likely differ for each
  quadrant

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Beiersdorf AG Example
STARS Mens grooming products, deodorants, and
baby care products have high market share and a
high growth market.
QUESTION MARKS Hair Care products exhibit a low
market share in a high growth market. It will
require resources to grow market share.
CASH COW Skin care products have the potential
to become a cash cow once the industry matures.
DOGS Depilatories exhibit both low growth and
low share. They are candidates for exit from
market.
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Step 1 and 2 Creating a Growth/Share Matrix
Step 1 choose Bubble and Scatter charts
Step 2 Select Growth/ Share
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Step 3 Entering Data for a Growth/ Share Matrix
X axis is Market Share Y axis is Market
Growth Bubble Size is of sales revenue for each
product line divided by the total sales revenue.
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Step 4 Setting Axis Scales
Mekko Graphics has a default manual Y axis scale
set to Minimum .1 and Maximum .2. However,
you can change these defaults or choose to use a
computed axis scale.