In this essay I will look at the strengths and weaknesses of using the Boston Matrix to help make decisions in business. I will first briefly explain the Boston Matrix and then analyse its effectiveness as an aid to making a marketing strategy.
Like Ansoff's matrix, the Boston Matrix is a well known tool for marketing managers. It was developed by the large US consulting group and is a way that a business can compare all of its products. The two aspects it looks at are market share (relative to that of competitors) and market growth. To use it you would look at all of your products and sort them into 4 categories, stars (products with a high market growth and a high market share), cash cows (high market share in a market with little
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There are several advantages and disadvantages of using the Boston Matrix to help make decisions like this...
Firstly, there is a common assumption that a high market share will automatically mean high profitability of a product. This isn't always the case, as the costs of development of a product must be taken into consideration. For example, when Boeing launch a new jet, yes they have a high market share but they still must cover the extremely high development costs. Although jets are a very specialised product, it is the same for other more simple products as a large chunk of a companies resources go on design and research. Also, at the launch of a new product lots of money must be spent on advertising to ensure that the product does get the market share it wants. The good thing about this is that if this risk is undertaken, the product may in the future become a cash cow and the companies will be able to reap the benefits and the product will be able to support new products. Do you see the cycle that the products follow?, this all links very closely with the product lifecycle. Of course a company should not just assume that a product will follow this cycle, there is no guarantee that a product will follow this cycle and a marketing department would be stupid to assume that a product will. This is another problem with using the Boston Matrix to make decisions (as it is a problem with all other aspects of marketing), that markets just aren't that predictable.
I have been asked to evaluate the marketing strategy for Yorktown Technologies.Specifically, what strategy they should use to become more successful by reaching their full potential and operating at an increased profit. Yorktown Technologies, in the beginning, had projected sales of $4,000,000. Unfortunately, with the absence distribution strategies and a marketing strategic plan, they only made a profit of $500,000. Expenses during the first years were $620,000 producing a loss of more than $120,000. Yorktown Technologies needed to focus on a new successful marketing strategy that will help the company reach its revenue goal.
A business must be highly competitive in the business markets today. For a business to grow successfully, remain sustainable, and competitive a business needs a good understanding of a marketing plan, and the knowhow to put the concepts to work for the business achieving a successful marketing strategy. Remaining successful when an economic growth has leveled out shows a sustainable business. Competitors that follow the same marketing concepts will need to develop a good marketing plan, and implement the concepts into a marketing strategy to remain a competitive business. A good marketing strategy contains a marketing plan describing the products offered, and taking into account
The Boston Matrix is a tool used by marketing managers to make decisions on which products within their portfolio that they should market and under what category on the
It can show the market share of certain brands and it also collected periodic purchase data to show the frequency purchase behavior so that we can know the repetition purchase of each brand.
The purpose of this exercise is to provide a framework for you to analyze the marketing environments and opportunities for Company G. These analyses provide the rationale for the decisions you make regarding your marketing strategies.
The BCG matrix is a model developed by Bruce Henderson of the Boston Consulting Group (NetMBA). The goal of the BCG matrix was to allow fellow marketers to easily analyze a product, whether it be old, or new, as to how effective it was in that particular market and if the product was successful in its overall product growth and market share. When it comes to selling a product, a company must overcome competitors in the same market who are looking to take a piece of the share of consumers. Therefore, in order to be successful, the use of a model such as the BCG allows a marketer to assess their competitive advantages as well as the ability to calculate the relative market share. For example, once you have products that have hit the market and have already established themselves, you can check back and cross examine those products to see which ones are important to your success as an organization and which ones you should contemplate scaling back on because these products may be viewed as questionable.
The BCG matrix portrays the perspective of the product portfolio, which is the growth-share matrix. This framework of tool categorizes products within a company's portfolio or within the business units as stars, cash cows, dogs, or question marks according to growth rate, market share, and positively or negative cash flow. By using positive cash flows a company can capitalize on growth opportunities. From this analysis, it can be seen that the products that is growing
The Nine –Cell industry attractiveness/business strength matrix graph will have the industry attractiveness on the vertical axis while the competitive strength is depicted on the horizontal axis; to the far left corner will be a large bubble representing U.S. grocery and the U.S. snacks, indicating that the U.S. Grocery and the U.S. snacks have both favorable industry attractiveness and competitive strength and thus warrants priority attention. In addition, the U.S. beverage, U.S. cheese and the U.S. convenient meals seem to huddle in the 3 diagonal cells stretching from the lower left to upper, indicating they merit intermediate attention by the Kraft incorporated. However, these segments of the company can be profitable if the company
Maytag formed a cross-functional new product development team to quickly focus the effort. It screened various product ideas and strategies on criteria such as potential for superior customer value, initial costs, long-term growth, social responsibility, and profitability. Using nearly 40 pieces of consumer research, the team refined what the strategy might be and what it would cost. Marketers today have better marketing metrics for measuring the performance of marketing plans. They can use four tools to check on plan performance: sales analysis, market share analysis, marketing expense-to-sales analyss, and financial analysis. Sales analysis consists of measuring and evaluating actual sales in relation to goals. Market share can be measured in three ways. Overal market share is the company's sales expressed as a percentage of total market sales. Served market share is its sales expressed as a percentage of the total sales to its served market. Its served market is all the buyers who are able and willing to buy its product. And relative market share can be expressed as market share in relation to its largest competitor. Annual plan control requires making
Marketing plays the most important role for the success of a business. In this chapter, the business’ marketing objectives are laid out together with the plans or actions that will be needed to achieve these objectives. Furthermore, this chapter includes the profile of the respondents which aided the researchers to create this part of the feasibility study.
The BCG Growth-Share Matrix is a portfolio planning model that was developed by Bruce Henderson of the Boston Consulting Group in the early 1970's. It is based on the observation that organisations business units can be classified into four categories based on combinations of market growth and market share relative to the largest competitor. Market growth serves as a proxy for industry attractiveness, and relative market share serves as a proxy for competitive advantage. The growth-share matrix thus maps the business unit positions within these
It gives valuable insight into a market where you can identify the size, growth and market share of your rivals, while observing trends and benchmarking objectives for the future.
Business that provide a wide range of products and services should regularly study their product portfolio. According to Lewis and Trevitt (2007) a product portfolio may be defined as “the range of products sold or produced by a business”. Businesses who strive for success should regularly study their product portfolio as it could show where the firm stands within the market, this would help a firm decide whether a product or service should be introduced or whether it should be taken off the market (Wolinski, and Coates,2015; 184). A way to analyse a product portfolio is through the use of the Boston matrix a tool that analyses “the position of a firm’s products in terms of their market share and the growth of the markets they operate in” (Surrdidge, Gillespie; 2002:66). For this assignment the Boston matrix will be analysed and evaluated. By first looking in depth at the Boston matrix, then by exploring the different components of the Boston matrix, and finally determining its usefulness for any business.
BCG matrix is also referred to as growth share matrix, Boston matrix, portfolio diagram or product portfolio. BCG matrix is a graph created by Bruce D. Henderson to help corporations analyze their business units and their product lines being created for Boston Consultation Group. The matrix help in the group allocation of resources and is also used as an analytical tool in the product management, brand marketing, strategic management and the portfolio analysis. Market performance analysis by the firms using its principles has called for the matrix usefulness into the question. For the use of the matrix, one plots the scatter graph so as to rank the business units and products on the market share basis and the growth rates. The matrix uses several tools in the analysis process, and these are cash cows, dogs, question marks and stars.
The BCG matrix is a model developed via the Boston Consultancy group within the early 1970’s. It is a good known device for an advertising manager. It 's based on the commentary that a company’s business models can be categorized into four important categories centered on combos of market development and market share, for this hence the name growth-share matrix. Market progress represents the industry attractive attractiveness, and market share stands for competitive knowledge. This helps the advertising manager allocate resources and is used as an analytical device in company advertising and marketing, product administration, strategic management and so forth. The basic idea in the back of the BCG matrix is that if a product has a greater market share, or if the product 's market grows faster, it is higher for the company. Products are classified into four distinct groups, Stars, Cash Cows, Problem Child and Dog. Let’s have a look at what each one means for the product and the decision making process