The Boston Consulting Group growth-share matrix is a helpful business tool. Because it helps companies determine which products or investments to prioritize. In this article, we look closely at the BCG Matrix of Coca Cola. And explain why it works well for businesses and why you should take notice.
Coca-Cola has a variety of drinks, including carbonated soft drinks and bottled water. They have something for everyone!
Coca-Cola needs to know where to invest its resources in order for it to grow. We can help them explore Coca Cola’s BCG Matrix. And even find the best ways to make money and increase investment potential.
Quadrant BCG Matrix For Coca-Cola
The BCG matrix is a popular tool used by organizations like Coca-Cola to figure out where they should invest. Stop developing some products, or discontinue certain businesses.
It has 4 sections:
Cash Cows (products that are profitable and not likely to change). Dogs (products that may have some growth potential but are less profitable).
Stars (highly successful products with room for more growth).
Question Marks (uncertain market potential and pose both growth opportunities and risks)
Stars
High-growth industries often have “Stars” which are businesses or products that have a large share of the market. These Stars represent the success of the business and can be an inspiration to others.
The Coca-Cola company has a matrix analysis that classifies their bottled water as a “star product.” This means that it is positioned in two different geographical areas. And features prominent brands like Kinley and Dasani. Sprite and Fanta also fall into this category.
Coca-Cola is growing its market share for healthy drinks, like sparkling and flavoured waters. This means that it has been investing in newer brands that focus on this segment of the market. These investments promise future opportunities for investment.
Investing in the healthy drinks market is a smart move for Coca-Cola’s growth and success. By positioning themselves as the go-to company for healthier options. They can continue to dominate this market while increasing revenue. This strategic approach using their strengths could lead to a bright future for Coca Cola in the beverage industry.
Question marks
Many products in the early development stage are represented by question marks. This means that we don’t know how well they will do in the market, and this puts people at risk because these products have a small share of the overall market.
Coca-Cola has created a new BCG matrix (which stands for “Born to Have Green Grown”). That includes products like Diet Coke, Honest Tea, Minute Maid, Smartwater, and Sparkling Water. These choices are designed to appeal to health-conscious consumers who want more noncarbonated
Coca-Cola is doing a lot of different things to try and improve its image. These changes are classified as “ambiguous” for the company.
The BCG matrix is a useful tool that companies can use to plan their growth and assess investment opportunities. It helps you understand market share. Even predicts how the market will grow so you can make informed decisions.
The BCG matrix can be helpful in figuring out where to allocate a company’s resources. But it isn’t the only factor that needs consideration. There are also limitations such as ignoring geographical demographics, brand strength, and competition. However, using the BCG matrix can lead to better decision-making and stronger market position.
Cash cows
Products that have high market shares and low growth rates are cash cows. This means they don’t need much investment to stay on top. Which results in the company making a lot of money with very little effort. These products must be managed carefully so they continue to succeed.
Coca-Cola is a leader in carbonated soft drink sales. It earns a lot of money from this category, and because consumers are moving away from unhealthy options. Coke is investing in other brands to appeal to this trend. For example, it’s creating sparkling water and flavored water products
It is important for any company to have cash cows. These businesses hold a lot of market share and are very profitable, which allows the company to invest in new products or expand into new markets.
By selling their successful products. Coca-Cola can both make more money and stay up to date with the constantly changing food industry.
Dogs
Coca Cola’s BCG matrix shows that products in this category have low growth and little potential for expansion. Management does not see these products as profitable. So they make minimal or no investment in them. For example, the declining sales of carbonated soft drinks is affecting Coke negatively. Because healthier options are becoming more popular. As a result, Coca Cola plans to stop making future investments in this venture
Products like Dog food products typically have diminishing returns. Meaning that the investment is not worth it for the company. Coca Cola’s management doesn’t see any benefit in continuing to invest in these products. Since they are unlikely to be profitable or popular.
Coca Cola’s canine-specific products are categorized in the lower left quadrant of the BCG matrix. This quadrant indicates that the market share for these products is low and that they are operating in a low-growth market. Additionally, Other products that Coca Cola has classified as Dogs in the past include Burn and Full Throttle energy drinks, Glaceau Vitamin Water, a vitamin-infused beverage, and Powerade Option.
Implications for Coca Cola’s Future
The BCG Matrix is a useful way to look at Coca-Cola’s products and see where they could grow in the future. By focusing on healthier alternatives, like noncarbonated drinks, the company has discovered new investment opportunities in this category.
The Kinley and Dasani brands are already successful products, poised to take over a larger market share. Meanwhile, Coca-Cola – the company’s cash cow – is under pressure as consumers increasingly turn to healthier alternatives.
To stay on top and keep competition at bay, the company should focus on developing new healthy products and getting their target audience aware of them.
The company’s new products, such as Honest Tea, Dasani water, Minute Maid juice, Smartwater sparkling water and Sparkling Water LaCroix have been very successful. However, the extent of their potential success is a question. Should they continue to invest in these products now so that they can achieve even higher profits in the future? This decision will either make these products stars or cash cows.
Conclusion
By using the BCG Matrix of Coca Cola, they can learn where their products fit strategically. They can understand how well things work and how much they might sell. Companies can use this to allocate resources better and make more profit for long-term growth.
Categorizing products helps analyze which to invest in and which to get rid of. Cash cows are good, stars have potential, dogs aren’t doing well, and question marks need more research. Coca-Cola uses data to make better decisions about their products.
To convince companies to invest in the right products, it is important to use The BCG Matrix. This tool can help you make smart decisions that will result in increased profits and growth.
References
The following references were consulted and used in the creation of this blog post:
Heartofcodes July 2022. Available at https://heartofcodes.com/bcg-matrix-coca-cola/
The Growth-Share Matrix In BCG. (n.d.). Investopedia. Available source: https://www.investopedia.com/terms/b/bcg.asp
Edrawmax available at: https://www.edrawmax.com/article/coca-cola-bcg-matrix-analysis.html Accessed on June 17
