In the BCG matrix, “dogs” are business units or products that have a low market share in a slow-growing market. These units often struggle and may be outdated. To improve the situation, the company may need to update the product or consider removing it from the portfolio entirely.
The BCG Matrix, also called the Boston Matrix or Growth-Share Matrix, was developed by the Boston Consulting Group. It helps companies analyze their products or business units based on their market growth and share.
What Is a Dog in BCG Matrix?
In business, a “dog” is one of the four categories in the BCG Matrix. A dog is a business unit or product with a small market share in an industry that is not growing much. Unlike “cash cows” or “stars,” which generate good profits or require significant investment, dogs are weak performers. They don’t bring in much money and don’t have the potential for high growth.
Understanding Dogs in BCG Matrix
A dog does not generate enough revenue to justify the resources it uses. It ties up capital and energy that could be better spent on more promising areas of the business. Because of this, it may make sense for a company to sell or remove the dog from its portfolio.
However, not all dogs are useless. Sometimes, a dog can play an important role, such as complementing other products in the company or attracting customers to other offerings. In these cases, management will need to decide if the benefits of keeping the dog outweigh the costs.
If a dog’s future looks bleak, it is usually better to sell or divest it sooner rather than later. Over time, the dog’s value is likely to decline further, making it harder to sell. A dog rarely turns into a high-performing product again.
How to Manage BCG Matrix Dogs
Dogs in the BCG matrix usually make just enough money to break even, but they don’t generate much profit. As a result, companies rarely invest in these products because it is not worth the effort. Instead, they focus on getting cash out of these units as quickly as possible. This could involve selling production equipment or cutting back on advertising spending.
Challenges in Growing Market Share for Dogs in BCG Matrix
Trying to grow market share in this situation takes a lot of resources. It is even harder if customers are loyal to competing brands, especially when switching costs are high.
Efforts to increase market share may also fail if the market is already in a decline stage. In that case, the extra profits from these efforts might not cover the costs involved.
Competitive Reactions and the Threat of a Price War
Because of the slow growth, any attempt to gain market share will likely spark a strong reaction from competitors. Market leaders, in particular, are not eager to lose their position. For example, if a company lowers its prices to attract customers from competitors, it may start a price war. Competitors will likely respond by lowering their prices too, which can hurt everyone’s profits.
When to Divest or Sell a BCG Matrix Dog
If the market is on the verge of decline, the best option is usually to get rid of the “Dogs.” These units are draining money from the company and should be sold off. The company might sell the product rights to another business or sell off production assets like equipment. This way, the company can focus on more profitable products, like those in the “Star” category.
When to Keep BCG Matrix Dogs for Strategic or Operational Reasons
However, if the market stays stable for a long time, the company might keep the Dogs around. They might contribute something useful, like helping to cover overhead costs or serving another strategic purpose. In that case, the company can still generate some cash by cutting production and marketing costs to a minimum.
Examples of Dogs in BCG Matrix
Google Glass, Google Plus, and Video Player
In Google’s BCG matrix, products like Google Video Player, Google Plus, and Google Glass are considered Dogs. These products face strong competition or lack consumer interest, which prevents them from being profitable.
Nike SB
Nike’s BCG Matrix places Nike SB (Nike Skateboarding) in the “Dog” category. This is because it has a small market share and limited growth. In the skateboarding community, Nike SB does not have a leading position. As a result, it struggles to attract strong support from its target audience.
Even though it is considered a “dog,” Nike SB is still part of the company’s BCG Matrix. Recently, Nike reintroduced the Nike SB Zoom Stefan Janoski OG. The company hopes that by updating the product, it will receive a more positive response from consumers.