BCG Matrix

BCG Matrix of Pepsi | BCG Matrix analysis of Pepsi
BCG Matrix also is known as the growth-share
matrix is used by organizations to classify their
business units or products into 4 different
categories: Dogs, Stars, Cash Cows and Question
Mark.
The growth rate of an industry and the market
share of a respective business relative to the
largest competitor present in the industry are taken as the basis for the classifications, for that
reason, BCG Matrix is also called as Growth-Share Matrix.
Past few years have been an inflection point for the company with Pepsico seeing a major drop
in their carbonated drinks business, thus prompting it to go back to the drawing board and relook
at its future strategy and also its product offerings.
In this BCG matrix, we will talk about different brands of Pepsico which over the years have
seen a fall in market share due to changing market scenarios and also brands which saw
exponential growth in their market share.
Let’s see what the 4 different quadrants of BCG Matrix are:
Dogs
These are the products with low growth or market share
These are low growth or low market share products and
have very few chances of showing any growth.

The investment strategy for these products has to be very well thought through by the
management as there are chances that these businesses might not yield any profit for the
organization.
These business units or products are cash traps and therefore are not seen as a useful source of
earning.
Cash Cows
These are the products which are in low growth
markets with high market share.
Products which are market leaders in their specific
industry and their industry is not expected to see any major growth in the future are considered
as Cash Cows.
These products are the money churners for the company and require very low investments to
sustain their leadership and profitability in the market.
Star
These are the products which are in high growth markets
with a high market share.
Products or Business Units which hold a high market share and are also considered to grow in
the future are positioned as Stars.

As a result, companies are interested to invest in developing these units further to gain a larger
market share and attain a stronger position in the market.
These products have the potential of being positioned as cash cows in the future owing to the
industry growth prospects.
Question Mark
Products in high growth markets with a low market
share.
Products or business units of the company that are still in the nascent stage of their product
lifecycle and can either become a revenue generator by taking the position of a Star or can
become a loss-making machine for the company in the future.
The industry has high potential to grow hence giving the room to the products to grow as well
only if the pertinent issues are managed effectively.
Let’s check out the BCG Matrix of Pepsi and
what products of the company fall under what
Quadrant.
CASH COWS:
Cash cows are the products that have a high
market share in a market that has low growth.
For Pepsi, Frito Lays is undoubtedly the Cash Cow for the company.
Ξ Frito Lays dominates the savory snacks market in the U.S with a 36.6% market share. The
next biggest manufacturers in this sector are Kellogg’s and Mondelez with much smaller 7% and
5.6% share respectively.
In the tortilla and tostada chips segment, Frito lays command a market share of 72.4% with
strong brands such as Doritos and Tostitos contributing to this market share gain.
The product requires very less investment to maintain its market share and fight off any
competition.
STARS:
The products or business units that have a high market share in high growth industry are the stars
of the organization.
Ξ In the case of Pepsico, Pepsi falls in the Star quadrant of the BCG Matrix of Pepsi.
Over the years, Pepsi has faced stiff competition from Coca-Cola and has also seen its market
share take a hit.
The company has to spend millions of dollars on brand awareness and promotional activities in
order to maintain its market share.
People are turning away from sugary drinks and empty calories. Evolving tastes and sugar
taxes have encouraged brands like Pepsi to invest in healthier alternatives.
Because of stiff competition from Coca-Cola and changing customer preferences
towards healthy and low-calorie drinks, Pepsi is seeing a shift from STAR quadrant to Dogs
quadrant.
Ξ Aquafina is one other brand which can be placed in star quadrant, Aquafina holds 15% of
bottled water market share and is second to Bisleri which has 36% market share.
Aquafina is slowly and steadily catching up with Bisleri and is expected to see a twice a growth
in the next 5 years.
Ξ Tropicana and Gatorade: Amid falling sales of aerated drinks as consumers shift to healthier
drinks, Pepsico aims to double the Tropicana business by 2020.
Carbonated soft drinks segment has seen a major decline in the past few years, the overall liquid
refreshment beverage market has been growing. Consumers aren’t drinking fewer fluids, they are
just not drinking sugary sodas as much anymore.
This change in consumer preferences is what has helped Gatorade see an exponential growth in
its market share.
Ξ Gatorade has been a forerunner for Pepsi in sports drink market with a mammoth 77% share,
whereas Powerade has 20% of this market.
Growing healthier lifestyle trends and emerging markets have prompted the brand to invest large
amounts of investments in healthier beverages and snacks in order to differentiate from
competitors and grow brand awareness.
QUESTION MARK:
There are products that formulate a part of the industry that is still in the phase of development,
yet the organization has not been able to create a significant position in that industry. The small
market share obtained by the organization makes the future outlook for the product uncertain,
therefore investing in such domains is seen as a high-risk decision.

Diet Sodas, once seen by consumers looking to cut calories as an alternative to traditions sodas,
are losing their fizz.
Ξ Diet Pepsi was launched with an aim to help Pepsico regain their market share but failed to
capture the desired response from the customers and one of the major reasons for that was tough
competition from Diet Coke.
Ξ 7up Nimbooz is one more brand which failed to succeed, launched in India in 2009, the brand
was not able to achieve significant sales volume.
DOGS:
Dogs are those products that were perceived to have the potential to grow but however failed to
create magic due to the slow market growth.
Failure to deliver the expected results makes the product a source of loss for the organization,
propelling the management to withdraw future investment in the venture. Since the product is not
expected to bring in any significant capital, future investment is seen as a wastage of company
resources, which could be invested in a Question mark or Star category instead.
Ξ Pepsi – Seeing Pepsi in Dog quadrant will shock a lot of people but considering the present
and future scenario, Pepsi will see a shift from Star to Dog quadrant.
Pepsi’s has dropped from 10.3% to 8.4%,
Declining carbonated soft drinks segment share due to increasing demand for low calorie and
healthy beverages and snacks is what is attributing the diminishing sales of Pepsi brand.
This concludes the BCG Matrix of Pepsi.

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What are the different quadrants in the BCG matrix?

What are the different quadrants in the BCG matrix?

Which Pepsi brands fall under the Cash Cow and Star quadrants?

Which Pepsi brands fall under the Cash Cow and Star quadrants?

BCG Matrix of Pepsi | BCG Matrix analysis of Pepsi

BCG Matrix also is known as the growth-share

matrix is used by organizations to classify their

business units or products into 4 different

categories: Dogs, Stars, Cash Cows and Question

The growth rate of an industry and the market

share of a respective business relative to the

reason, BCG Matrix is also called as Growth-Share Matrix.

at its future strategy and also its product offerings.

exponential growth in their market share.

Let’s see what the 4 different quadrants of BCG Matrix are:

These are the products with low growth or market share

These are low growth or low market share products and

have very few chances of showing any growth.

These are the products which are in low growth

markets with high market share.

Products which are market leaders in their specific

sustain their leadership and profitability in the market.

These are the products which are in high growth markets

with a high market share.

the future are positioned as Stars.

market share and attain a stronger position in the market.

industry growth prospects.

Products in high growth markets with a low market

become a loss-making machine for the company in the future.

only if the pertinent issues are managed effectively.

Let’s check out the BCG Matrix of Pepsi and

what products of the company fall under what

Cash cows are the products that have a high

market share in a market that has low growth.

5.6% share respectively.

share take a hit.

order to maintain its market share.

taxes have encouraged brands like Pepsi to invest in healthier alternatives.

Because of stiff competition from Coca-Cola and changing customer preferences

in the next 5 years.

drinks, Pepsico aims to double the Tropicana business by 2020.

just not drinking sugary sodas as much anymore.

its market share.

whereas Powerade has 20% of this market.

amounts of investments in healthier beverages and snacks in order to differentiate from

competitors and grow brand awareness.

therefore investing in such domains is seen as a high-risk decision.

are losing their fizz.

competition from Diet Coke.

was not able to achieve significant sales volume.

resources, which could be invested in a Question mark or Star category instead.

Pepsi’s has dropped from 10.3% to 8.4%,

This concludes the BCG Matrix of Pepsi.

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