The BCG matrix is a divided strategic orientation matrix that makes it possible to divide products and/or areas of activity of a group into two axes and four categories.
The two axes are market growth rate and relative market share. The products get divided into four categories. These categories are featured products, dilemmas, cash cows, and dead weights. In order to better understand what the BCG matrix consists of and what its purpose is, in this article, we will take as an example the press, which has undergone profound changes in recent years.
Press in 2022
In recent years, the world of the press has undergone significant changes. From the period when information was only available through radio, television, or newspapers in paper format, we now live in the digital age. Indeed, paper-based newspapers recorded a sharp decline in 2021, as consumers seem to appreciate the digital format more than ever. The Caféyn application, which brings together almost all of the French press and even some foreign issues in a single application, has had growing success this year. Since the onset of the health crisis, consumers have needed to be informed but also to be entertained. Since kiosks and other specialised stores are often closed due to successive confinements, they naturally turned to digital solutions. In 2021, 417 million copies of digital newspapers were sold, an increase of 19.2% in one year. On the other hand, the general public print press experienced a drop of 2.9% compared to 2020.
BCG matrix, explanations, and examples with the press
Featured Products/Services
These services have very strong market penetration and an equally strong growth rate. They are generally considered the future of a group, and in the case of the press, the stars are the internet, social networks, and blogs. All these areas may require high investments without too much risk. The world of the press has evolved, and the Internet is the most popular choice amongst readers. In the years to come, they will undoubtedly maintain their dominant position. If these services are not necessarily the most profitable, they are the ones that risk becoming cash cows in the future when the market will have reached its mature phase. We can see today that the press is very present on the net. This format is practical for fitting in with the new expectations and lifestyles of consumers, who are ultra-connected and who want to have access to information on any domain, anytime, anywhere.
Cash cows
Cash cows are the logical continuation of star products. In the case that concerns us, we find digital subscriptions, dedicated applications, and the paper press, which remains among the favourites of the French. These services are highly competitive in a mature market. The investments are small, and the profits are always high.
Dilemmas
The dilemmas are the services that pose more or less of a problem for the sector. In the case of the press, television is part of this characteristic. Indeed, the figures show that it is watched less and less, however, there is still a significant percentage of French people who turn it on every day to watch the news or other programs. Generally, it is consumers from Generation X who are the fondest of television, the others now favour mobile media. The market is growing here but penetration remains low. In this box are the services that fail to cope with the competitive intensity. In the case of the press, over time television may become a dead weight.
Deadweights
Deadweights are characterised by low market penetration, with a market that is very clearly on the decline. Profitability is low, even non-existent, and in the case of the world of the press, we find in this category the radio, which is used less and less in French homes. The emergence of new technologies and consequently new means of communication favour the net and mobility in the press sector. Consumers no longer want to have to make concessions. Now all you need is a smartphone to have the chosen press everywhere and all the time. Since the radio works with frequencies, it will become completely obsolete over time.
Conclusion
The BCG matrix is useful for defining the strategy of a group, and knowing which products and/or services are a source of profitability for the company or, on the contrary, which must be discontinued. Its objective is to be able to meet investment needs. In the case of the press, new technologies have set up a new era, that of digital, and consumers, now ultra-connected, are clearly abandoning old media to focus on new ones, more accessible at all times and in all premises.
REFERENCES
https://www.lefigaro.fr/medias/presse-les-ventes-en-recul-en-2021-mais-l-engouement-pour-le-numerique-se-confirme-20220217
https://www.nutcache.com/fr/blog/matrice-bcg/