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 2007 Universal Music Group 27% Time Warner Music 17 Sony 16 Bertelsmann's BMG 14 EMI 10 Independents 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 Markets experiencing high growth are ones where the total market share available is expanding, and there’s plenty of opportunity for everyone to make money.

Each circle represents a separate division. The size of the circle corresponds to the proportion of corporate revenue generated by that business unit The pie slice indicates the proportion of corporate profits generated by that division.

STARS High growth, High market share Stars are leaders in business. They also require heavy investment, to maintain its large market share. It leads to large amount of cash consumption and cash generation. Attempts should be made to hold the market share otherwise the star will become a CASH COW.

CASH COWS Low growth , High market share 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 They are located in an industry that is mature, not growing or declining.

DOGS Low 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 MARKS High growth , Low market share Most businesses start of as question marks. They will absorb great amounts of cash if the market share remains unchanged, (low). 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

CASH FLOW

LIMITATIONS BCG MATRIX uses only two dimensions, Relative market share and market growth rate. Problems of getting data on market share and market growth. High market share does not mean profits all the time. Business with low market share can be profitable too.

ANSOFF’S MATRIX

Selling more of an existing product to an existing market 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 in a new market, for instance bringing out different bottle sizes to attract different buyers. 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. Coca-Cola identified the need for a new sports drink and launched Powerade. 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 Strategy This strategy builds upon the existing product range, which an organization has established, but seeks to find new groups of customers for it.

Product Development Strategy An 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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