Markiting Essay Example | Topics and Well Written Essays - 500 words

Markiting - Essay Example The two dimensions of the BCG model, market growth and relative market share, serve as proxies for industry attractiveness and competitive advantage respectively which are two important determinants of company profitability (â€Å"BCG Matrix† para 1). Looking at it from the product lifecycle point of view, it is often prudent for an organization to have a balanced product portfolio consisting of both high-growth and low-growth products. High-growth products are those that require greater resources and effort to market now but that have a high probability of generating immense revenues in the future, for example Apple could categorize the iPad here. On the other hand, a low-growth product is an already established product that brings the organization constant flow of cash for example in Apple’s case the iMac. The BCG model operates under two important assumptions. First of all, increasing market share leads to an increase in the generation of cash. The experience curve manifests that relative market share increases as a firm creates cost advantages (â€Å"BCG Matrix† para 2). Secondly, a growing market requires investment in assets to increase capacity which results in the consumption of cash.