Stars are a key component in the BCG matrix that have a potential to become company’s cash cow—a consistent source of income. Let’s discuss stars in BCG matrix in detail.
What is a Star in the BCG Matrix?
In the BCG matrix, “Stars” are products that have a high market share in a growing market. These products perform well in the market and have a lot of potential for future growth.
Typically, star products or business units hold a strong position in the market or offer a unique advantage over competitors. Stars are crucial for a company because they represent its future success.
However, the company needs to invest heavily in these products to keep them growing and to get the most profit from them.
How BCG Matrix Star Affects a Company’s Strategy
The “Star” category brings in a lot of revenue. With a large market share, the product has a strong position and makes many sales. However, stars need big investments. The market is growing quickly, but this also makes the product vulnerable. Competitors can use strong strategies to try to take market share.
Unlike “Cash Cows,” companies may not make a lot of profit from stars yet. Even though stars bring in high revenue, they also have high costs to maintain their position.
Companies must invest in marketing and advertising. Stars are often the main focus of the company. Management should improve distribution, build customer loyalty, and add new features. This helps keep the product attractive and ensures it stays strong in the market.
If the investment is successful, the star can stay dominant even as the market matures and may become cash cows.
Examples of BCG Matrix Stars
Here are some real world examples of stars in the BCG matrix.
Lancôme
Lancôme is seen as a “Star” brand in the L’Oréal BCG Matrix. It is a luxury brand with a strong market presence and rapid growth. The brand’s success comes from its high-quality products, excellent reputation, and continuous innovation in skincare and makeup.
Lancôme competes with other luxury brands like Estée Lauder and Dior. However, it stands out because of its smart marketing and loyal customers. The future looks promising for Lancôme, as it continues to expand into new markets and boost its online presence.
SKODA and SEAT
SKODA and SEAT are two of star products in Volkswagen’s BCG matrix. They are experiencing strong sales growth and have great potential in the market. To keep up this momentum, Volkswagen needs to keep investing in them. SKODA’s sales have already passed Audi’s, and SEAT is showing promising increases in revenue.
Stelara and Imbruvica
This drug is becoming more popular and growing fast. It works well for several conditions and is widely trusted by doctors, so its future looks promising. Imbruvica is used to treat different types of cancer. It has quickly gained market share and shows strong potential for further growth as it expands to treat more cancer types. Both are categorized as stars in Johnson and Johnson BCG Matrix.
Frequently Asked Questions
What is a star product?
A star product has a high market share and high growth. They can be considered market leaders. To keep their position, these products require significant investment which helps support their continued growth and maintain their lead over competitors.
Is Tesla a star in the BCG matrix?
Tesla was considered a “Star” due to its high market growth and strong market share in the electric vehicle industry. The company made big investments to increase its manufacturing capacity and build more charging stations, aiming to meet the growing demand for electric vehicles.