It is also called as BCG model which link ups to marketing and it is a prototype well-known for profile management tool, which is utilized for product life cycle. It often used concerning prioritize whatever products within company product mix have more funding and attention.
It is produced by Bruce Henderson of the Boston Consulting Group in the early 1970's.
based on classification of products into four categories predicated on combinations of market growth and market talk about relative to the largest rival.
Each product has its product life circuit, and each level in product's life-cycle represents a different account of risk and go back. In general, a corporation should maintain a well-balanced portfolio of products. Using a balanced product collection includes both high-growth products as well as low-growth products.
A high-growth product is for example a new one which we want to reach some market. It takes some work and resources to advertise it, to create distribution channels, and build sales infrastructure, but it is a product that is expected to bring the silver in the future. An example of the product would be an ipod touch.
A low-growth product is for example a recognised product known by the market. Characteristics of this product do not change much, customers know what they are receiving, and the purchase price does not change much either.
This product has only limited cover marketing.
The is the milking cow that brings in the constant movement of cash. An example of this product would be a regular Colgate toothpaste.
But the question is, how do we exactly uncover what period our product is in, and how do we classify that which you sell?
Furthermore, we also ask, where will each of our products fit into our product mixture? Should we promote one product more than the other one?
The BCG matrix can help with this.
The BCG matrix gets to further behind product mixture.
Knowing whatever we are available helps professionals to make decisions in what priorities to assign never to only products but also company departments and business units
What is the BCG matrix and how does the BCG model work?
Placing products in the BCG matrix ends in 4 categories in a stock portfolio of your company:
STARS (High Expansion & High Market Share)
Have high market talk about in an evergrowing market
They will be the leaders in the business, but need a lot of support for campaign a placement
If market talk about is organised in reserve they are likely to develop into cash cows
QUESTION MARKS (High Expansion & Low Market Show)
These products are in growing marketplaces but have low market share
New products where purchasers have yet to discover them
The online marketing strategy should be developed as to get markets to adopt these products
They have high needs and low comes back due to low market share
If they do not increase their market show they become puppies quickly
To cope with them is to either invest seriously in them to gain market share or to sell them
BCG CASH COWS (Low Growth, High Market Talk about)
Have high market share in an adult market
If competitive advantages has been achieved, cash cows have high income and generate lots of money flow.
Because of the reduced growth, campaign and placement purchases are low.
Investments into aiding infrastructure can improve efficiency and increase cash flow more.
Cash cows will be the products that businesses shoot for.
BCG Puppies (low growth, low market share)
Dogs are in low development markets and have low market share. They must be avoided, minimized and the expensive turn-around blueprints will not help for the kids.
Limitations of BCG model
The constraints include:
how to explain market / how we get data about market share
A high market share does not automatically lead to profitability at all times
This model use only two sizes i-e market show & product/ service development rate
Low talk about businesses can be profitable too (Pups can be more profitable than cash Cows)
The overall development rates of market will not mirrored by this model
The ramifications of synergy between sections are neglected by this model.
For appeal of market expansion is not the only indicator
We can suggest reading about the SWOT model, SPACE matrix, and Michael Porter's Five Causes model.
The BCG matrix model has some similarities with the Internal-External IE matrix method.
The BCG matrix can help to find a strategy. The Quantitative Strategic Planning Matrix (QSPM)model can be used to compare proper alternatives.
(a) Consider the expansion of product life routine and Ansoff development matrix, identify and discuss how within your own opinion, your selected company have applied these models to help ensure the ongoing success of the company products and marketing strategies used.
(b) Measure the effectiveness of marketing and tactical models with regards to the continue success or failing of your chosen organisation
De Wit, B. and Meyer, R. (2004) - Strategy Process, Content, and Framework International Point of view, 3rd Release, Thomson Learning
Johnson, G. , Scholes, K. and Whittington, R. (2005) Exploring Corporate Strategy: Words and Conditions, 7th Model, Financial Times Prentice Hall.
Lynch, R. (2006) Corporate Strategy, Fourth Edition, Financial Times Prentice Hall.
Mintzberg, H. , Ahlstrand, B. and Lampel, J. (1998) Strategy Safari, Financial Times Prentice Hall
Kotler, Marketing Management
You may use any other textbooks.
Websites & PDF documents:
http://walmartstores. com/sites/AnnualReport/2008/docs/wal_mart_annual_report_2008. pdf - Annual Report
http://www. walmart. com/ - Wal-Mart
www. carrefour. com/ - Carrefour Food Retail
www. economist. com The Economist
www. ers. usda. gov/Briefing/GlobalFoodMarkets/Industry - Global GROCERY STORES: Global Food Industry Structure
www. ft. com The Financial Times
www. kroger. com/ - Kroger Food Retail
www. metrofoods. world wide web/ - Metro Food Retail
www. plunkettresearch. com/Industries/ - Plunket Research
www. tesco. com/ - Tesco Food Retail
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