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Starting
point Focus Means Ends
Existing Selling and Profits through
Factory products promotion sales volume
BAL 1993
Customer Delivered
Value
Customer Integrated Profits through
Market needs marketing customer
satisfaction
st at ng
(Licensing/ JVs
n
em io
sy rm eti
st in g
em g
fo rk
in Ma
Product
tio nd
or Ma
en ion g
n
ta a
g r
em at tin
sy ani ket Promotion
pl niz ke
st z a i n g
im ga ar
em tio
Political/ n or M Social/
Legal Cultural
environment environment
Competitors
CASE ANALYSIS
Population size
MARKET
Age groups SEGMENTS WERE
Income levels EMERGING
Scooters
Urban Family
Educational Levels
Growth rate of population RURAL /URBAN
Motorcycles
SEGMENTS
Regional Distribution Rural demand
1993: BAL’s MARKETING STRATEGY
FOREIGN COLLABORATIONS:
Bajaj-Kawasaki
Kinetic-Honda
Hero-Honda
LML-Piaggio
Escorts-Suzuki
What were the MARKETING STRATEGY
ALTERNATIVES open to BAL? (1992)
Bajaj Auto was losing Market Share to
Competitors. (Decline in Domestic
1. Demand)
Should Bajaj Auto go for the Rural Market?
Large Growing Market.
Population in Rural Areas = 74%. BAL’s Market
Share (1992) = 60%.
Expected
Existing
Existing
Products
Products
Sales
Two Wheelers
0 5 10
Time (years)
How could BAL achieve Intensive Growth …..
Three Intensive Growth Strategies: Apply
Ansoff’s Product/Market Expansion Grid
s ive Related Technology Unrelated
n
Inte owth Existing New Technology
Gr egies Products Products
at
Str BAL Started NEW MODELS STYLE, PRODUCT
With Two Wheelers DESIGN IMPROVEMENTSLINE EXPANSION
Existing
1. Market 3. Product
markets penetration development
URBA Strategy
N BAL Three
BAJAJ entry
MARK
into RURAL
Wheelers
ET
MARKET
SEGMENT
New 2. Market PASSENGER
CARS
markets development 4. Diversification
Strategy BAJAJ
EXPOR ELECTRICAL
T APPLIANCES
MARKE Cooking Ovens
Diversification Strategies may be:
• Concentric Diversification:
Same or RELATED TECHNOLOGY,
Different products for the same market.
(Auto Product Line Extension)
• Horizontal Diversification:
UNRELATED TECHNOLOGY, Different
Products for the Same Consumer market.
Note that Horizontal Diversification is different from
Horizontal Integration.
• Conglomerate Diversification: Entirely
DIFFERENT UNRELATED TECHNOLOGY,
different product for a DIFFERENT MARKET.
Example: Market Diversification Strategy
Wills Cigarettes. Diversification into:
•Lifestyle Clothing,
•Liquor, Beer,
•Frozen Foods, Soft Drinks.
Strategic Establish Strategic
Business Units Business units
(SBUs)
SBU’s • Assign resources to
SBUs
WHAT IS AN SBU? • Plan new business,
-It is a single business/collection
downsize of
older
businesses. businesses
Example: BAJAJ AUTO Ltd SBU’s
PMU 1 PRODUCT
PMU 2 PMU 3
CATEGORY
Product line Extension
AUTO UNIT FINANCE ELECTRONICS
2 Wheelers UNIT Ovens PRODUCT
3 Wheelers Heaters SUB-
Cars PMU Light Bulbs CATEGORIE
S
PMU PMU
• 2 Wheelers
• 3 Wheelers
• Cars
BAL EXPORTS
• Accessories
• 2 Wheelers
• 3 Wheelers
EXAMPLE : BAL COMPANY SBU’S:
PRODUCT PORTFOLIO MATRIX
MARKETS CONSUME INDUSTRIAL EXPORT GOVT
R /CORPORAT MARKET MARKET
MARKET E
SBUs MARKET
CONSUMER √ Yes √ Yes
PRODUCTS
SBU 1 WHAT IS AN SBU?
2 Wheelers
- A single business/collection
3 Wheelers
of businesses.
Cars - It has its own set of
FINANCE √ Competitors
Auto Loans SBU 2 -Own Strategic plan and
ELECTRONICS
Profit Performance
√
Ovens SBU 3 ?
Heaters
Light Bulbs
THE PURPOSE OF
IDENTIFYING SBU’S IS TO
DEVELOP SEPARATE
STRATEGIES FOR EACH SBU
•Which Businesses to Invest In?
(The Investment Portfolio of a
Company) Market Opportunity
Analysis
•Assessing Each Business for
Resource Allocation
How Much to Allocate each Business
Unit (SBU)?
•Developing a Strategy/Game
Plan for Each Business.
Strategy for Achieving Long-term
objectives.
EVALUATING THE SBU’S
PRODUCT PORTFOLIO OF A
COMPANY
BCG MATRIX
CLASSIFYING SBU’S BY PROFIT
POTENTIAL
Use of:
•BCG MODEL (Growth-Share Matrix)
(Boston Consulting Group Method)
Growth versus Relative Market Share
Relative Market Share= Market Share /Share of Largest
Competitor in the business 10%/ 70% - 0.14, 10%/
30%=0.3
20%-
Market Growth Rate
?
INVEST
10%-
8%- Cash cows Dogs
6%-
4%- DIVEST
8
2%- 6 HARVEST
0 7
10x 4x 2x 1.5x 1x .5x .4x .3x .2x .1x
MARKET SHARE
RELATIVE TO LARGEST Relative Market Share