Relative market share can be calculated in terms of revenues or market share. It is calculated by dividing your own brand’s market share (revenues) by the market share (or revenues) of your largest competitor in that industry.
How is BCG market share calculated?
Determining the Relative Market Share in BCG Matrix
Hi Tareq, in order to compute your company’s relative market share (since your company has the leading market share) you need to divide your market share (92%) by the second largest market share company (6%). Here your relative market share would be 92% / 6% = 15.333.
What is the difference between market share and relative market share in the BCG matrix?
Relative market share offers a way to benchmark a firm’s or a brand’s share against that of its largest competitor, enabling managers to compare relative market positions across different product markets. … In the BCG matrix, one axis represents relative market share––a surrogate for competitive strength.
What are stars in BCG matrix?
Stars: The business units or products that have the best market share and generate the most cash are considered stars. Monopolies and first-to-market products are frequently termed stars. However, because of their high growth rate, stars consume large amounts of cash.
Is BCG matrix still relevant?
The matrix remains relevant today—but with some important tweaks. A Changing Business Environment Since the introduction of the matrix, conglomerates have become less common and the business environment has become more dynamic and unpredictable. Market share is now less of a driver of and surrogate for advantage.
What is a good relative market share?
The purpose of the “relative market share metric” is to access a firm’s or a brand’s success and its position in the market. A firm with a market share of 25% would be a powerful leader in many markets but a distant “number two” in others.
What does market growth rate mean?
The rate at which a market’s size is increasing. This is usually expressed as a percentage per annum. The market growth rate is a key factor to be considered when calculating the development of a specific product in a particular market. …
Who developed BCG matrix?
What is cash cow in BCG matrix?
Description: A Cash Cow is a metaphor used for a business or a product, which exhibits a strong potential in terms of returns in a low-growth market. … A cash cow is a term used in the Boston Consulting Group (BCG) matrix. A business becomes a cash cow or a dog depending on its performance in the growth stage.