Bcg n Ansoff Matrix

MARKETING MANAGEMENT

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DEVELOP A MARKETING PLAN FOR A PRODUCT OF YOUR CHOICE.

Refer to Sample Marketing Plan

Page No. 57-58

Marketing Management: A South Asian Perspective

BCG Matrix

BOSTON CONSULTING GROUP (BCG) MATRIX is developed by BRUCE HENDERSON of the BOSTON CONSULTING GROUP IN THE EARLY 1970’s.

According to this technique, businesses or products are classified as low or high performers depending upon their market growth rate and relative market share.

Market share is the percentage of the total market that is being serviced by your company, measured either in revenue terms or unit volume terms.

RELATIVE MARKET SHARE (RMS)

RMS = Business unit sales this year Leading rival sales this year

Example

Market Share of the World's Largest Music Companies

COMPANY MARKET SHARE IN 2007Universal Music Group 27%Time Warner Music 17Sony 16Bertelsmann's BMG 14EMI 10Independents 17

RMS = Business unit sales this year = 16 = 0.59% Leading rival sales this year 27

Market growth (MGR) is used as a measure of a market’s attractiveness.

MGR = Individual sales - individual sales this year last year Individual sales last year

8

Question Marks

• High growth, low share • Build into Stars or phase out • Require cash to hold market share

Question Marks

• High growth, low share • Build into Stars or phase out • Require cash to hold market share

Stars

• High growth & share• Profit potential • May need heavy investment to grow

Cash Cows

• Low growth, high share•Produce cash

Cash Cows

• Low growth, high share•Produce cash

Dogs

• Low growth & share • Low profit potential

Dogs

• Low growth & share • Low profit potential

Relative Market ShareHigh Low

Mark

et

Gro

wth

Rate

Low

Hig

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Analyzing Current SBU’s:Boston Consulting Group Approach

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STARSHigh growth, High market share

Stars are leaders in business. They also require heavy investment, to

maintain its large market share. Attempts should be made to hold the market

share otherwise the star will become a CASH COW.

They are foundation of the company and often the stars of yesterday.

They generate more cash than required. They extract the profits by investing as little

cash as possible

CASH COWSLow growth , High market share

DOGSLow growth, Low market share

Dogs are the cash traps. Dogs do not have potential to bring in much

cash. Number of dogs in the company should be

minimized. Business is situated at a declining stage.

QUESTION MARKSHigh growth , Low market share

Most businesses start of as question marks. Why question marks? Question marks have potential to become

star and eventually cash cow but can also become a dog.

Investments should be high for question marks.

ITC- TOBBACO ITC is a leader in terms of volume,

of Rs. 11000 crores, 97 billion sticks cigarette market.

The segment is witnessing stagnancy with volumes declined in last three years.

In last five years, Rs. 1000 crore has been pumped into the cigarettes business. Now, additional Rs. 500 crores are planned to be invested.

There is an inevitable shift of consumers away from the smoking habit.

In spite of dropping volumes, ITC is able to maintain its profitability by increasing margins.

CASH COW

ANSOFF’S MATRIX

Selling more of an existing product to an existing market. This is going deeper into a market so it is called market penetration (More Promotion).

Selling an existing product to a new market. This is called market development.

Selling a new product to an existing market. This is called product development as it means making changes to a product, for instance a new flavour like Coca-Cola Vanilla.

Selling a new product to a new market. This is called diversification. Ex. diet coke being targeted at people who are health conscious.

COCA COLA

Market Penetration Strategy

This focuses growth on the existing product range by encouraging higher levels of take-up of a service among the existing target markets

Example: A supplier of fresh orange juice encouraging its customers to drink orange juice on occasions when they might otherwise consume milk.

Market Development StrategyThis strategy builds upon the existing product range, which an organization has established, but seeks to find new groups of customers for it.

Product Development StrategyAn organization may choose to develop new products for its existing markets.

Again referring to mobile phones, many companies have developed innovative products to offer as additional accessories to existing customers, including “hands-free” car kits, traffic information services and on-line information services.

NIVEA Visage Soft Facial Cleansing Wipes show product development. Women who bought NIVEA skincare products were looking for new ways to clean and care for their skin.

READ

MARKETING INFORMATION SYSTEM (MIS)

PAGE NO. 63-66

MARKETING MANAGEMENT-A SOUTH ASIAN PERSPECTIVE

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