MB0030 Set-1
MB0030 Set-1
The origin of the Boston Matrix lies with the Boston Consulting Group in
the early 1970s. It was devised as a clear and simple method for helping
corporations decide which parts of their business they should allocate
their available cash to. Today, this is as important as ever because of the
limited availability of credit.
However, the Boston Matrix is also a good tool for thinking about where
to apply other finite resources: people, time and equipment.
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. The higher your market share, the higher proportion of the market
you control.
The Boston Matrix assumes that if you enjoy a high market share you will
normally be making money (this assumption is based on the idea that you
will have been in the market long enough to have learned how to be
profitable, and will be enjoying scale economies that give you an
advantage).
The question it asks is, "Should you be investing your resources into that
product line just because it is making you money?" The answer is, "not
necessarily."
This is where market growth comes into play. Market growth is used as a
measure of a market's attractiveness. Markets experiencing high growth
are ones where the total market is expanding, which should provide the
opportunity for businesses to make more money, even if their market
share remains stable.
Model Components:
Dogs:
Low Market Share / Low Market Growth.
In these areas, SBU’s market presence is weak, so it's going to take a lot
of hard work to get noticed. Also, you won't enjoy the scale economies of
the larger players, so it's going to be difficult to make a profit.
Cash Cows:
High Market Share / Low Market Growth
Here, SBU’s are well-established, so it's easy to get attention and exploit
new opportunities. However it's only worth expending a certain amount of
effort, because the market isn't growing and your opportunities are
limited.here we can say cash cow can be milked.
Stars:
High Market Share / High Market Growth
Here SBU’s are well-established, and growth is exciting! These are
fantastic opportunities, and you should work hard to realize them.
Key Points
The Boston Matrix is an effective tool for quickly assessing the options
open to you, both on a corporate and personal basis.
Limitations:
As any other marketing theories in the field, the BCG matrix model is not
perfect either. There are according problems of this theory.
Some limitations concerning the particular use of BCG include:
1. Only two dimensions – market share and product or service growth
rate, are employed. These are the first limitations.
2. How to define market and how to get data about market share are also
problems.
3. High market shares don’t always necessarily lead to profit at all times.
It is not the only success factor.
4. Low share or niche businesses can be profitable too, which means in
the real world some Dogs can be more profitable than cash Cows.
5. The model cannot reflect the growth rates of the general market and
market growth is not the only indicator for market attractiveness.
6. The model also neglects the effects of synergy between different
business units.
PepsiCo is one of the world’s largest food and beverage companies with
annual turnover of $44 billion [2008]. The company employs
1. Pepsi Products:
Quality:
Pepsi follows on Quality standard across the globe.
Pepsi has a long standing commitment to protecting the consumers whose
trust and confidence in its products is the backbone of its success. In
order to ensure that consumers stay informed about the global quality of
all Pepsi products sold in world, Pepsi products carry a quality assurance
seal on them.
“One Quality Worldwide” assurance seal appears on the entire range of
Pepsi’s beverages.
The composition of the soft drink is as follows:
Water (86-90%), Sugar (10-13%), CO2 (0.3 -0.7%) and Concentrate
(0.2-0.4%).
- Water used in Pepsi Co soft drinks must be as safe as possible for
human consumption. At every plant , Pepsi require incoming water
to be purified even further, using a variety of processes. At
minimum, every plant in world employs a dual back to back carbon
filter.
- Sugar must meet the standards of quality of Pepsi, which are
uniform for all plants across world. All Pepsi sugar manufacturers
should undergo the same supplier qualification process. All plants in
Design:
3. Pepsi Place:
Micro Environment
Supplier :
Marketing Intermediaries:
The***** was set up in **** and is the selling agent for Pepsi in India, it
is based in the *****. It manages the supply of several wholesalers,
retailers, restaurants, hotels and other such food outlets. In order to
achieve the projected sales targets effectively, the organisation ensures a
comprehensive strategic alignment with the overall Pepsi’s business
strategy.
Customers:
Pepsi customers are mostly of young generation between age 14 and 30
years.
Publics:
There are lots of public are included such as channels, investment houses,
radio stations, news papers community groups, general public etc. And
also internal public include workers, board of directors, managers and so
on.
Macro Environment:
Demographic forces:
Age:
The age of potential customers is around 14 to 30years.
Income:
As far as income levels are concerned, Pepsi targets mainly middle
class to the upper class.
Economic Forces:
When the economy of the consumer becomes low and expenses become
high, consumers move towards another product which is of lower cost
than the PepsiCo product.
Natural forces:
Due to any earthquake, or disaster shortage of product will be there by
marketers or suppliers, so this affects the product and market.
Technology Forces:
There is huge investment from the government to develop the
infrastructure opportunities and the creation of the new product such as
new advanced formulas, changes in technology of production this affects
the product.
Political and legal:
India is politically stable and hence economy is stable and as a result it
attracts investments from other countries. This increases other beverages
companies to enter Indian market and this in turn affects the Pepsi
products.
b. Social factors:
Human beings are social animals. They live and interact with other
people. Therefore there is a chance of influence by others on their
opinions. Marketers identify such influential persons or groups of
consumer. Generally such groups are classified into two major groups
namely reference groups and family.
Reference Groups are used in order to evaluate and determine the
nature of given individual or other group’s characteristics and social
attributes. Reference groups are those that people refer to when
evaluating their own qualities, circumstances, attitudes, values and
behaviours.
Family: Indian culture gives utmost importance to the family. People
discuss with their family before purchasing the valuable items.
Therefore many companies use either whole family or kids in their
promotional programs.
For example Godrej introduced memory backup auto washing machine.
They have shown family enjoying without any problems of washing
clothes.
c. Personal Factors:
Individual factors like age, occupation, lifestyle and personality
influence the consumer decision making. Personality is the image of
personal traits. Traits includes self confidence, dominance, autonomy,
defensiveness, adaptability and aggressiveness. Many companies use
this concepts in their marketing communications. Bajaj pulsar used
muscularity to highlight its image(definitely male).
d. Psychological factors:
Company A:
Company B:
Company C:
Given the above table, the firm’s resources and the products requirement
in its present form would decide the choice of a particular market-
coverage strategy. Finally the competitor’s adoption of a particular
strategy should be considered for deciding company’s own strategy.
a. Attribute Positioning:
b. Benefit Positioning:
d. User positioning:
Positioning the product as best for some user group. For example in
Parle-G, the booy was positioned as rock star. This advertisement
basically targets kids and boys.
e. Competitor Positioning: