MARKETING MANAGEMENT

BCG Matrix, Ansoff Matrix & GE Matrix

Presented to: Ms Astha Gupta

Presented by Harshita Baranwal
 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
 STARS

 Stars are leaders in business.

 May not necessarily produce highest cash flow.
 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
 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.

 Enjoys economy of scale and high

profit margins being the market
leader.

 They are located in an industry that

is mature, not growing or declining.
 DOGS
 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 MARK
 Most businesses start of as question
marks.

 They will absorb great amounts of cash

if the market share remains
unchanged, (low).

 Question marks have potential to

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

 Investments should be high for question

marks
BCG OF PEPSICO
RELATIVE MARKET SHARE

STARS ????
PEPSICO TROPICANA
MARKET
BRANDS GATORADE
GROWTH
RATE
CASH DOGS
COWS FRITO –LAY
QUAKERS
 ANSOFF
First course of action should be to review whether any

opportunities exist for improving it’s existing businesses’

performance. Ansoff’s model called product-market

expansion grid.
 • Market penetration

Market penetration is the name given to a growth strategy where the

business focuses on selling existing products into existing markets.

• Market development

Market development is the name given to a growth strategy where

the business seeks to sell its existing products into new markets.
 • Product development
Product development is the name given
to a growth strategy where a business
aims to introduce new products into
existing markets. This strategy may
require the development of new
competencies and requires the business
to develop modified products which can
appeal to existing markets.

• Diversification
Diversification is the name given to the
growth strategy where a business
markets new products in new markets
GE Matrix / McKinsey matrix
portfolio analysis Model
 Starting point of GE Matrix

In the late sixties and early seventies, while the Boston Consulting Group were devising the BCG
or Growth Share matrix, General Electric, a leading corporation in the United States, were also
looking at concepts and techniques for strategic planning.
The firm was disappointed in the profits that they had made from their investments in the
various businesses, which suggested flaws in GE’s approach to investment decision-making.
GE asked McKinsey and Company, a consulting company in the USA, to develop a portfolio
approach with a wider dimension than the BCG matrix.
In 1971 McKinsey and Co developed the business screen for General Electric to differentiate the
potential for future profit in each of the 43 strategic business units.
 GE OVER BCG

Firstly, MARKET ATTRACTIVENESS replaces MARKET GROWTH

as the dimension of
industry attractiveness, and includes a broader range of factors other than just the market
growth rate.
Secondly, COMPETITIVE STRENGTH replaces MARKET SHARE
as the
dimension by which the competitive position of each business unit is assessed.
In the original GE McKinsey
matrix, business strength is plotted
on the vertical axis; the industry
attractiveness on the horizontal axis
and the size of the circle represents
the size of the industry with a
shaded wedge representing the
firm’s current share of the industry.
The matrix is divided into nine boxes.
The matrix allows a company to
assess the fit between the
organizational competencies and
the business/product offerings.

It also introduces the forecasted

positioning of
businesses/products on the
matrix facilitating the strategic
planning process.
 Factors that Affect Market
Attractiveness

- Market Size
- Market growth
- Market profitability
- Pricing trends
- Competitive intensity / rivalry
- Overall risk of returns in the industry
- Opportunity to differentiate products and services
- Segmentation
- Distribution structure (e.g. retail, direct, wholesale
Factors that Affect Competitive Strength

- Strength of assets and competencies

- Relative brand strength
- Market share
- Customer loyalty
- Relative cost position (cost structure
compared with competitors)
- Distribution strength
- Record of technological or other innovation
- Access to financial and other investment
resources
Who Defines the Factors?

The factors are usually identified by

a representative, experienced

group of managers from the firm

including corporate, business and

functional managers.
1. The three cells at the top left hand
side of the matrix are the most
attractive in which to operate and
require a policy of investment for
growth – these are usually colored
green.
2. The three cells running diagonally
from left to right have a medium
attractiveness, are colored yellow and
the management of businesses within
this category should be more cautious
and with a greater emphasis being
placed on selective investment and
earning retention.
3. The three cells at the bottom right
hand side are the least
attractive, therefore colored red and
management should follow a policy of
harvesting and / or divesting unless the
relative strengths can be improved.
 Best Use

• If an organization is made up of many

business units or if a business unit is
made up of a number of different
product lines.
• Important for assigning priorities for
investment in the various businesses of
the firm and is guidance for resource
allocation.
• This matrix can be used at all levels
within the organization.
• It allows an organization to focus on
the strengths and weaknesses of the
business units or products.
 GE of UK Retailing

Source: http://www.oppapers.com/subjects/ge-matrix-marketing-page25.html