marketing matrix

Presented by:Mansi Bajpai (09020242004)Jagdish Meena (09020242014)Neeraj Kumar (09020242015)Pallavi Gupta (09020242023)Shiraj Sherasia (09020242039)

Submitted to:Mrs. Deepa SFaculty of MarketingSymbiosis Institute of International Business, Pune

Marketing Matrix

Introduction

GE Matrix In consulting engagements with General Electric in the

1970's, McKinsey & Company developed a nine-cell portfolio matrix as a tool for screening GE's large portfolio of strategic business units (SBU).

This business screen became known as the GE/McKinsey Matrix

The GE / McKinsey matrix is similar to the BCG growth-share matrix in that it maps strategic business units on a grid of the industry and the SBU's position in the industry.

GE Matrix

The GE matrix however, attempts to improve upon the BCG matrix in the following two ways:

The GE matrix generalizes the axes as "Industry Attractiveness" and "Business Unit Strength“.

The BCG matrix uses the market growth rate as a proxy for industry attractiveness and relative market share as a proxy for the strength of the business unit.

Industry Attractiveness The vertical axis of the GE / McKinsey matrix is industry

attractiveness, which is determined by factors such as the following:

Market growth rate

Market size

Demand variability

Industry profitability

Industry rivalry

Global opportunities

Macro-environmental factors (PEST)

Business Unit Strength

The horizontal axis of the GE / McKinsey matrix is the strengthof the business unit. Some factors that can be used todetermine business unit strength include:

Market share Growth in market share Brand equity Distribution channel access Production capacity Profit margins relative to competitors

The business unit strength index can be calculated bymultiplying the estimated value of each factor by thefactor's weighting, as done for industry attractiveness.

Strategic Implications

Resource allocation recommendations can be made to grow,

hold, or harvest a strategic business unit based on its position

on the matrix as follows:

Grow strong business units in attractive industries, average

business units in attractive industries, and strong business units in average industries.

Hold average businesses in average industries, strong

businesses in weak industries, and weak business in attractive industries.

Harvest

weak business units in unattractive industries, average business units in unattractive industries, and weak business units in average industries.

There are strategy variations within these three groups.

For example, within the harvest group the firm would be inclined to quickly divest itself of a weak business in an unattractive industry, whereas it might perform a phased harvest of an average business unit in the same industry.

BCG Matrix Designed to develop business strategy in 1960 by Bruce

Henderson, president of the Boston Consulting Group.

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

STARSHigh 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 COWSLow 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.

QUESTION MARKSHigh 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.

DOGSLow 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.

BCG Matrix for Nestle

StarsNescafe (Star) Nescafe is one of the leading coffee brands in the Indian market. It has find a dominance which is unparalleled by any other brand

in the country. Not only does it have a high market share but it growth rate is

also significantly high. The name Nescafe has become generic with coffee.

Ceralac (Star) Ceralac has become one of the leading baby food products It has witnesses quite a long hold in its market share with its

sales increasing on a continuous basis for almost more than one and a half decade.

Its different variants have kept competitors at bay and its finds a place easily at almost every general or provisional store in the Indian market.

It is a major contributor for Nestle India’s revenues.

Cash CowsMaggi Noodles (Cash Cows) Maggi Noodles, has more households of consumption in India

that any other country in the world and has become the first preference of Indian children in terms of instant food, is only a cash cow and not a star.

Maggi Noodles has a significantly high market share in the Noodles market in India, the market growth rate of Noodle consumption is not very high.

Number of repeat purchasers is high in case of Maggi, the rate of increase among the new purchasers is not too high.

Question MarksMaggi Pickles (?) Limited variety (especially in this taste crazy country) Maggi Pickles is doubted for the twin reasons:

1. High price and packing, which seems to target it to the upper substrata.

2. Lack of significant number of variants poses it a challenge to maintain itself in such households.

It is not a dog because it is not the market which has low growth rate.

The market of packaged pickle is growing but Maggi Pickles which is unable to gather a substantial share in this growing market.

Nestle Butter (?) Salt less Yet to grow from its pre-launch Huge competition from Amul, the market leader in this field. Nestle Butter seems to be rejected by the consumers for the

reason that its taste does not suit the Indian psyche.

DogsNestle Dahi (Dogs) Unaware that Nestle offers a Dahi. Competition from Amul’s Masti Dahi. The concept of packaged Dahi is not being accepted by the

consumer who prefers to play it safe with the local manufacturer

Lack of a growing market makes Nestle Dahi to be placed in as a Dog.

Limitations of BCG Matrix 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. High market share is not the only success factor Market growth is not the only indicator for attractiveness of a

market Sometimes Dogs can earn even more cash as Cash Cows

ANSOFF’s Matrix

This matrix was developed by Igor Ansoff for identifying corporate growth opportunities.

The Ansoff Growth matrix is a tool that helps businesses decide their product and market growth strategy.

Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets.

ANSOFF’s Matrix

PRODUCT

MARKET

PRESENT MARKET NEW MARKET

PRESENT MARKET

MARKET PENETRATION

(Selling more of the same products to the

same types of people)

NEW PRODUCT DEVELOPMENT

(Selling new products to existing customers)

NEW MARKET

MARKET DEVELOPMENT

(Selling of existing products to new

types of consumers)

DIVERSIFICATION

(Selling new products to new)

Market Penetration StrategyThis 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 StrategyThis strategy builds upon the existing product range, which an organization has established, but seeks to find new groups of customers for it.

There are many possible ways of approaching this strategy, including:

• New geographical markets • New product dimensions or packaging • New distribution channels • Different pricing policies to attract different customers or create new market segments

Product Development StrategyAn 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.

Diversification This is an inherently more risk strategy because the

business is moving into markets in which it has little or no experience.

Horizontal diversification ( this occurs when the company develops new products that could appeal to its current customers group )

Vertical diversification ( the company moves into the business of its suppliers or its customers )

Concentring diversification ( this results in new product lines or services that have marketing and technological synergies with existing product lines even though the products may appeal to a new customer group )

conglomerate diversification ( this occurs when there is neither technological not marketing synergy and this requires reaching new customer groups.

Reference A study on the construction of BCG Matrix for Nestle India by

Tarun Jain (http://ssm.com/abstract=1120857) http://tutor2u.net/business/strategy/ansoff_matrix.htm http://www.valuebasedmanagement.net/

methods_ge_mckinsey.html http://www.quickmba.com/strategy/matrix/ge-mckinsey