BCG Matrix of COCA COLA
BCG Matrix also is known as the growth-share matrix is used by organizations to classify their business units or products into 4 different categories: Dogs, Stars, Cash Cows and Question Mark.
Let’s see what are these 4 different quadrants of BCG Matrix:
These are the products with low growth or market share
These are low growth or low market share products and have very few chances of showing any growth.
The investment strategy for these products has to be very well thought through by the management as there are chances that these businesses might not yield any profit for the organization.
These business units or products are cash traps and therefore are not seen as a useful source of earning.
These are the products which are in low growth markets with high market share.
Products which are market leaders in their specific industry and their industry is not expected to see any major growth in the future are considered as Cash Cows.
These products are the money churners for the company and require very low investments to sustain their leadership and profitability in the market.
These are the products which are in high growth markets with a high market share.
Products or Business Units which hold a high market share and are also considered to grow in the future are positioned as Stars.
As a result, companies are interested to invest in developing these units further to gain a larger market share and attain a stronger position in the market.
These products have the potential of being positioned as cash cows in the future owing to the industry growth prospects.
Products in high growth markets with a low market share.
Products or business units of the company that are still in the nascent stage of their product lifecycle and can either become a revenue generator by taking the position of a Star or can become a loss-making machine for the company in the future.
The industry has high potential to grow hence giving the room to the products to grow as well only if the pertinent issues are managed effectively.
Here is a gist of points that we covered about the 4 different quadrants of the BCG Matrix.
Question Marks :
- Most businesses start as Question marks
- These business units or products require high capital investment
- They can either become Stars and then Cashcows or and turn in Dogs as well
- These are the businesses or products which are in the declining stage
- They are cash traps – Getting a return on investment from these businesses or products is next to impossible.
- They are the star products or businesses of the company
- They operate in a high growth industry and have a high market share and for this reason, they require high cash investment to maintain its market share.
- They are the money churners for the company
- These businesses have a high market share in a low growth industry that is mature not declining nor growing.
- They require less cash investment and generate more cash than required.
Let’s check out the BCG Matrix of Coca Cola and what products of the company fall under what Quadrant.
Worlds leading ready-to-drink beverage company, Coca Cola company has more than 500 soft drink brands, from Fuse Tea to Oasis to Lilt to Poweradeorlds, but none of them is anywhere close to coke brand in awareness, revenue, and profit.
Cashcows are the products that have a high market share in a market that has low growth.
Below are few products which have been the cash cow for the company for all these years:
Coke: Coke for years has been a market leader in carbonated soft drink segment and a major cash generator for the company. Having a presence in 200+ countries, coke has been the no.1 choice for millions of consumers all these years when it comes to choosing a carbonated soft drink.
Check out the marketing mix of Coca-cola
The products or business units that have a high market share in high growth industry are the stars of the organization.
Kinley and Dasani: Kinley and Dasani are still bottled water brands owned by Coca-Cola and offered in different countries in markets. While Kinley is quite a popular bottled water brand in European and Asian countries, Dasani has a quite a stronghold in US market.
Owing to the growing demand for low calorie and healthy drinks, the bottle watered industry is currently under an evolution phase.
To cater to different customer segments and their needs, coke is looking out at launching different variants of bottled water EG: Apart from just simple bottled water, Coke also offers Kinley and Dasani sparkling water (just to cater to affluent customers).
That’s not it, these also come in different flavors giving the customers a wide range of options to choose from.
There are products that formulate a part of the industry that is still in the phase of development and the organization is trying to create a significant position in the industry.
The small market share obtained by the organization makes the future outlook for the product uncertain, therefore investing in such domains is seen as a high-risk decision.
The products in this segment can either grow and become stars or cash cows for the company or can turn into a bad investment.
The beverage industry is at an inflection point and is undergoing a major transformation.
With an aim to cater to the changing needs of consumers to zero calories and no sugar drinks, Coca-cola company has launched a number of products/brands to cater the same.
The company is investing a lot of capital to create awareness about these brands. These products/brands are still in the initial/development phase of the product lifecycle and have a huge potential to grow.
Diet Coke. Smartwater, Honest Tea, Sparkling water, Minute Maid are few brands/products which fall under the Question Mark quadrant.
Growing healthier lifestyle trends and emerging markets have prompted the brand to invest a large amount of capital in healthier beverages in order to differentiate itself from competitors and grow brand awareness and market share.
Dogs are those products that were perceived to have the potential to grow but however failed to create magic due to the slow market growth.
Failure to deliver the expected results makes the product a source of loss for the organization, propelling the management to withdraw future investment in the venture. Since the product is not expected to bring in any significant capital, future investment is seen as a wastage of company resources, which could be invested in a Question mark or Star category instead.
Coke – Declining demand for carbonated soft drinks due to increasing demand for low calorie and healthy beverages and snacks is what is attributing the diminishing sales of Coke brand.
Coke brand which is currently regarded as a cash cow for the company will eventually fall in quadrant qaudrant in the future due to all these factors.
This concludes the BCG Matrix of Coca Cola.
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