BCG Matrix in LinkedIn

LinkedIn started its activity in 2003 and is currently one of the most popular social media platforms, with over a billion users. At the same time, it is the only business-oriented social media platform right now.

The BCG Matrix, also known as the Boston Consulting Group Matrix, is a strategic tool used for portfolio analysis and categorizing businesses or products into four quadrants based on their market growth rate and relative market share. While the BCG Matrix is commonly applied to analyze a company's product portfolio, it is not typically used directly within the LinkedIn platform itself. However, businesses can use the BCG Matrix concept to assess the performance and growth potential of their LinkedIn marketing efforts by categorizing their different LinkedIn campaigns or strategies based on their market growth and market share in the professional networking space.

So it is okay if companies and the active people in it use methods like BCG Matrix. I mean, marketers, business owners, sales people, and others continually try to promote their businesses on LinkedIn, right?

What is this matrix? What is it good for? BCG or Boston Matrix is one of the essential tools that anyone who is even a little bit active in marketing should know. Keep reading to get familiar with this BCG matrix.

What Is BCG Matrix In LinkedIn?

First of all, I must say that this matrix is a general method of market analysis, so it cannot be said that it is specialized to LinkedIn. Although you can apply it to your company page functions, yet it is not just for LinkedIn. But what is BCG matric in LinkedIn or other places?

The BCG matrix is a model that analyzes a business’s products to help with long-term strategic planning. Business models are usually determined by offering profitable products or services. But every company should anticipate and identify changes and incorporate them into what they provide to remain profitable.

Today’s money-making products are easy to identify, but a good business strategy asks another question: “What will the future look like?” The BCG matrix will give you the answer to this question!

This matrix, also known as the Boston matrix or the market share matrix, was first introduced and compiled by a company called Boston Consulting Group and has been used in the business world since the 1960s. This matrix helps company’s gain insight into what products will best help them seize market share growth opportunities and gain a competitive advantage.

Boston Matrix can also be considered a SWOT analysis considering its total elements somehow. What it does for a company is to categorize product portfolios and help companies make strategic decisions.

The so called decisions can be in different fields. Decisions such as investment, identifying declining products, and identifying the right product to invest in to achieve the highest growth rate. This matrix can be considered a mathematical relationship, the scope of which is the growth rate and market share, and its variables are four values (cash cow, star, dog, and question mark).

The BCG matrix is based on the coordinate axis forms a square table showing the relative competitive position on the X axis (the industry’s growth rate) on the Y axis (Market share). Each of the production lines or business units is drawn on this matrix based on the growth rate of the industry as well as its relative share in the relevant markets.

The method can be used to determine the priorities that should be considered for each product. The main idea of this matrix is to determine the position of a product based on the two mentioned elements, i.e., market share and market growth rate.

Based on these two factors, we choose four spaces in the BCG table, each of these four positions has a name, and each products’ plan in each class are specified.

The assumption of the market’s attractiveness is under investigation in this matrix. Based on the location of the investigated company, it is placed in one of the squares named in order:

1- The House of Stars

2- The House of Question Mark

3- The House of Cash Cows

4- The House of Dogs

Description of the Matrix and Its Terms

let us define each of them separately, tight here, shall we?

Question Mark:

The units in this house are in a situation where their relative market share is small, but they compete in an industry that is growing quickly. Usually, these products have an extreme need for cash for they got introducd recently, and their ability to provide some money is small.

Therefore, these units are called question marks. The parent company must decide whether to strengthen them by implementing market penetration, market development, product development strategies, or selling them.

Star:

This house represents the best long-term opportunities that lead to the growth and profitability of the parent company. These units have a high relative share of the market and a high growth rate in the industry. As a result, the parent company must invest significantly in it and strengthen it to maintain its superior position.

The parent company should consider the following strategies for these units: vertical integration upwards, vertical integration downwards, horizontal integration market penetration, market development, product development, and partnership.

Cash Cow:

The units placed in one part have a relatively sizeable relative market share, but they compete in an industry with a prolonged growth rate. That is why it is called a cash cow. Supply their surplus. They can often be milked. Many of today’s dairy cows are yesterday’s “stars.”

Dog:

Units placed in this house have a small relative market share and compete in an industry with prolonged growth or no growth. When a unit first becomes a “dog,” the best strategy is to reduce some of its activity. This model is simple and easy to understand. It provides a basis for management to make decisions.

Axes of the BCG matrix

This matrix has two axes, each of which has an index. The reason for creating this figure and diagram is the need to manage cash flow. In this model, it is assumed that one of the leading indicators for the production of cash funds is the relative market share, and the leading indicator for the consumption of cash funds is also the market growth rate.

Relative market share

Market share is measured in comparison to the company’s largest competitor. A reason for such a choice is that this indicator contains more information than just cash flow, as with earnings. This index shows the brand’s position among the leading competitors and the possible role of the brand in the future.

Market growth rate

A higher market growth rate means more earnings and profits, and it also means more cash to invest for future growth. This investment is made in products that show good potential for continued growth and success and are expected to achieve a return on investment.

This matrix assumes that a higher growth rate indicates demand and investment needs. The market growth rate reveals more information about the brand’s position than the cash flow. It is an excellent indicator to recognize the strength of the market and its future potential, and its attractiveness to more competitors.

How to Use the BCG Matrix on LinkedIn?

Now that you know what is BCG matrix, let us see how to make a BCG matrix example, Ok? there are 5 stages to use the matrix:

Stage 1. Select the unit

Strategic business units, brands, product lines, or the entire company are all areas that can be analyzed using the BCG matrix. The chosen unit affects analysis as a whole and essential definition, and the market, industry, competitors, and niche all depend on the selected unit.

Stage 2. Define the market on LinkedIn

After choosing the desired unit or area for analysis, defining the market is the most critical step for the rest of the matrix. An un correct market definition leads to the wrong classification of the target unit.

For example, if we analyze Mercedes-Benz in the passenger seat market, it will be a dog unit with a small market share, but if we examine it in the luxury car market, it will be a cash cow unit.

Step 3. Calculate the relative market share

We must calculate the selected unit’s relative market share in this step. We can do this calculation based on revenues or market share. The formula used here divides the market share or payments of the selected brand by the market share or prices of the largest competitor in that industry. The obtained result is entered in the x-axis.

Step 4. Calculate the market growth rate

To find the growth rate in the desired industry, you can use the available online reports about that industry. If this is not possible, you can estimate the market growth rate according to the average revenue growth of leading companies in that industry. The obtained number is the percentage that is placed on the y-axis.

Step 5. Draw circles in the matrix

After calculating all the digits, you can put them in the matrix. You can do this by drawing a circle for each brand in each unit or all brands in a company.

The Role of Cash Flow in the BCG Matrix

Cash flow is important in deciding on the right market share growth strategy. There are four rules to calculate cash flow:

(1) High market share and profit margins go together,

(2) To grow, you need to invest in your assets,

(3) Market growth has limits, and you should adjust when growth slows, and

(4) The market moves quickly, so you must adapt to succeed.

The BCG Matrix can help companies make strategic decisions, even in unpredictable markets, with some adjustments. Companies must balance investment in new and existing sectors, manage acquisitions and divestitures with precision, and evaluate tests and monitor economic conditions during the trial.

BCG Matrix Examples

How about some real-life examples? It won’t be such a bad idea, right?

We all know Apple company, don’t we? Such a huge company always uses the Boston matrix. But do you know which category each Apple product falls into in the four quadrants of the Boston matrix?

Apple Matrix Boston

Star

The star of Apple’s BCG matrix can be considered the iPhone. This product has the largest market share among Apple products, and its market is still growing. One thing to note is that every star eventually declines, and after a star falls in the Boston matrix, it turns into a dog or a cash cow.

Apple BCG Matrix Cash Cow

iPad and MacBook are the cah cows of Apple’s product portfolio. These products have a high market share, but the market for these products is still growing. Therefore, they require relatively little investment to continue to be profitable.

Apple Boston Matrix Dog

One of the products of the Apple company, which was released to the market years before the iPhone, is the iPod. The iPod was a device that came in its time to replace the Walkman. This product was relatively well received in its time. Apple has become a company that does not make economic sense to reinvest in it. The reason is that people prefer to listen to their podcasts and music on their smartphones rather than using an additional device for this.

Apple BCG Matrix Question Mark

iWatch can be considered the big question mark of Apple Company in the Boston Consulting Group matrix. There is a big question mark on the future of the Apple Watch, and it needs to be clarified what the market share of this product will be.

Of course, you should also know that Apple can gain a booming market like the iPhone market for iWatch. It needs to be clarified but it is still too early to decide to invest in this product and develop it.

The Boston matrix of PepsiCo

Now it’s time to analyze PepsiCo with the BCG matrix. Be careful that the category selected in PepsiCo Company (first step) is not products but its subsidiary companies.

Cash cow:

Pepsi is the cash cow for PepsiCo, with a market share of 58.8% in the US. ​

Star:

PepsiCo’s stars include Gatorade (energy) and Mountain Dew (carbonated soft drink).

Question mark:

One of the activities of PepsiCo subsidiaries is the sale of diet products. But the big question in this section is whether the diet industry will prosper in the future. Diet Pepsi, Pepsi Max, Pepsi Quaker, etc., are placed in the question mark section of PepsiCo’s BCG matrix because it is unclear whether they will grow. ​

Dog:

Currently, PepsiCo’s Tropicana and Mango Naked are in the dog house at this very moment.

Boston matrix for Samsung brand

If we want to check the Boston matrix for Samsung brand products:

star:

audio-visual equipment and Samsung smartphones. These stars take out much cash from the company due to the complexity of the manufacturing technology and the extensive advertising for them. These stars are competing with brands like Apple and LG in a market with a high growth rate.

cash cows:

This brand’s Samsung kitchen household products are considered cash cow because they have found their place in the market and have simpler and even cheeper manufacturing technology than phones or smart TVs.

Dog:

Considering the Apple brand’s market share in the smartwatches field and the low growth of this industry, it is not surprising that Samsung smartwatches are placed in the dog section of the BCG matrix.

Question Mark:

And finally, Samsung’s office products with a high market growth rate and Samsung’s low market share in this market are question marks for the Samsung brand.

Advantages and Disadvantages of BCG Matrix

Every method has pros and cons. Nothing is perfect in this world, right? Let us take a look at the table below:

Advantages of BCG matrix	Disadvantages of BCG matrix
It helps identifying potential cash cows and stars, which can guide resource allocation decisions	It may not be suitable for all industries or types of businesses, as it assumes a certain level of market growth and market share
It can be used to evaluate the performance of individual products or product lines within a company’s portfolio	It can be difficult to accurately classify products as cash cows, stars, question marks, or dogs
Provides a framework for identifying potential acquisition targets or divestment candidates	May overlook important qualitative factors such as brand equity or customer loyalty
It can be used to compare the relative performance of different business units or product lines within a company	Ignores factors such as product quality, customer satisfaction, and overall market dynamics
It helps companies understand the life cycle of their products and adjust their strategies accordingly	Can oversimplify complex business situations and lead to a one-size-fits-all approach to strategy
Provides a basis for evaluating the potential of new product launches or market entry strategies	It may not account for the nuances of regional or local markets
Can help companies identify emerging market trends and adjust their strategies accordingly	Can be overly focused on short-term profitability at the expense of long-term growth
Provides a visual representation of a company’s product portfolio, making it easy to communicate with stakeholders	It may not account for the potential impact of disruptive technologies or new entrants to the market

Looking at the table, we can see that the BCG matrix has several advantages. It provides a simple and easy-to-understand framework for analyzing a company’s product portfolio, which can help companies make strategic decisions about resource allocation and investment.

It also encourages companies to divest non-profitable products and invest in high-growth products, which can be used to evaluate the performance of individual products or product lines.

However, the BCG matrix also has several disadvantages. One major drawback is that it assumes that high market share equals profitability, which is only sometimes correct. It also ignores external factors such as competition and market trends, which can be critical in determining the success of a product.

Additionally, the BCG matrix can oversimplify complex business situations, lead to inaccurate conclusions, and may not account for critical qualitative factors such as brand equity or customer loyalty.

The BCG matrix can be a valuable tool for companies evaluating their product portfolio and making strategic resource allocation and investment decisions. However, it’s essential to use the BCG matrix in conjunction with other strategic planning tools and to consider the specific context and application carefully.

Importance of BCG Matrix in LinkedIn: A Conclusion

In the end, I must say it again that the Boston matrix is one of the critical market analysis tools. Despite its disadvantages and limitations, it still is used by large and small companies to predict the future of their products and develop a production and digital marketing strategies.

the measures that this matix considers can be critical in LinkedIn, considering this platform is one of the most significant sources of leads and finding target audiance.

This process helps business owners, managers, and marketing experts identify new opportunities on LinkedIn and, of course, on other platforms and to remove products that do not perform well.

However, these disadvantages and limitations sometimes make some organizations hesitate to use the BCG matrix and makes them to look for better ways to analyze the market and their products. The final decision is always yours to make. Do you think using the BCG matrix benefits you and your company? If you answer yes, then what are you waiting for?

FAQ

What companies use the BCG Matrix?

The BCG Matrix, developed by the Boston Consulting Group, is utilized by large corporations with diversified product lines to help allocate resources among those products. Companies like Apple, Procter & Gamble, and Unilever have historically used this matrix. It aids these companies in deciding which products to invest in, maintain, or discontinue based on market growth rates and relative market share.

Is BCG matrix still used?

Yes, the BCG Matrix is still used by various organizations as a strategic management tool. While it has been around since the 1970s, its simple visual representation of products or business units on a matrix based on their growth potential and competitive position makes it a popular tool for portfolio management and strategic decision-making.

How do you find the BCG matrix of a company?

To determine the BCG matrix of a company, you’d start by identifying all its major product lines or business units. Next, calculate the relative market share of each, which is the product’s market share divided by the market share of its largest competitor. Then, determine the market growth rate for each product. Plot each product on the matrix: on the x-axis (relative market share) and y-axis (market growth rate). Based on their positions, products will fall into one of the four categories: Stars, Cash Cows, Question Marks, or Dogs.

BCG matrix in LinkedIn example?

If one were to apply the BCG Matrix concept to LinkedIn’s various features: “LinkedIn Learning” might be a “Star” given its growing popularity and the e-learning trend. “Job Listings” could be considered a “Cash Cow” since it’s a primary revenue stream with high market share. Newer features or less popular ones might fall into “Question Marks”, while any outdated or less impactful feature could be considered a “Dog”. This is a hypothetical application and the actual positions might vary based on real-time data and business insights.

💡 Additional read: How Much Does LinkedIn Learning Cost?

Importance of the BCG matrix?

The BCG Matrix is essential because it provides a framework for companies to evaluate and prioritize their product portfolio based on market performance and potential. By categorizing products into Stars, Cash Cows, Question Marks, and Dogs, businesses can determine where to invest, maintain, or divest. This strategic clarity helps companies align their resources more effectively with market realities, maximizing profitability and growth.

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