The BCG matrix, also known as the growth-share matrix or the product portfolio matrix, is a chart which aids companies to manage their portfolio and analyze their products. The BCG matrix is divided into four quadrants, namely, the stars, question marks, cash cows and dogs. These quadrants are formulated or created based on the products’ market share and market growth. By categorizing different company’s product according to their market share and growth rate, the matrix enables companies to better understand the performance of their products within the market and how to improve on them. It enables companies to identify high-growth projections and provide strategies through which the company can exploit its strengths e.g. cash flows in high potential products to exploit on market growth prospects. This matrix provides companies with a systematic, analytical and disciplined tool which assist the companies with product management, brand marketing, and portfolio analysis (Arline, 2015). Using the BCG matrix, this paper is going to analyze Unilever’s portfolio and determine which of the matrix’s four quadrant different products lies.
Ranked among the largest consumer goods company in the world, Unilever has a wide range of products, approximately more than 400 brands. Despite the huge number of products, the company has mostly focused on a narrow range of products, the sustainable living brands which are responsible for the huge growth rates enjoyed by the company. Unilever’s 2015 full year end results reported that the company had registered a turnover increase of 10% with an underlying sales growth of 4.1% and a total cash flow of 4.8 billion Euros. The sales growth registered came from the Personal Care and Foods products which also contributed to strong cash flow and profitability. Home Care and Refreshment is another product segment which also reported growth for the company (Unilever, 2015). These are some of the company’s sustainable living brands which are growing faster (at the rate 30%) than the other company products. These brands were responsible for almost 50% of the company’s growth registered in 2015 (Unilever, 2016).
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Given the above scenario, using the BCG matrix, we can try exploring and understanding the company’s portfolio management; how and why the company has been maintaining their product portfolio. In the star quadrant which represents a product with high growth rate and market share, Unilever has one key brand, the Lipton. Lipton is currently among the top selling tea brand and despite its supposedly strong stature in the company; Unilever has continued to invest heavily in the brand through the patented TESS technology to maintain its position. This caused a 5.6% growth in the product’s market share between 2012 and 2014.
In the second quadrant, the cash cow quadrant which represents brands or products with high market share and low market growth, Unilever have a product called Marmite. Marmite has been leading product in the spread industry but has reached a saturation point. In fact, it has slowly started to decline regarding its market share in major markets across Europe and America. Apart from the money channeled towards its advertisement, very little money is being invested in the product to further improve its performance. To the contrary, money generated from this brand is channeled to other products in the star or question mark quadrants.
The problem child or question mark quadrant involves those products which have high market growth but with a low market share. These are usually young brands with a foreseeable bright future but at the moment they are performing below their capacity. These products usually receive money from the cow cash quadrant for their improvement and innovation. Unilever’s products in this quadrant include the two detergent Omo brand (in Africa) and Persil (in the UK). The company has been trying to adjust the products from washing powder to liquid detergents. Finally, the dog quadrant is the quadrant which represents products with low market share and low market growth. They are brands which have declined and are on their death bed; they bring no profit and should be disposed of. Such a product in Unilever is the dietary product known as Slim-Fast which was sold off in 2014 to Kainos Capital (Daneshkhu, 2014). This product which was introduced in the market in the year 2001 had properly served the company. At some point, it had a 45% market share within the US.
With their diverse range of products and the constantly changing market conditions, Unilever has been forced to maintain a balance of their products within the four different quadrants provided by the BCG matrix in order to achieve or maintain their long term goals
References
Arline,K (2015) What Is a BCG Matrix? Retrieved from http://www.businessnewsdaily.com/5693-bcg-matrix.html
Daneshkhu, S (2014). Unilever sells Slim-Fast to Kainos Capital. Retrieved from https://www.ft.com/content/44446b24-085e-11e4-9380-00144feab7de
Unilever (2015) 2015 Full year results. Retrieved from https://www.unilever.com/Images/q4-2015-full-announcement_tcm244-470010_en.pdf
Unilever (2016) Sustainable living brands leading Unilever growth . Retrieved from https://www.unilever.com/sustainable-living/sustainable-living-news/news/sustainable-living-brands-leading-unilever-growth.html
