BCG Matrix & Product Life

Cycle

Devang Parekh 34
Gautam Venkatraman 57
Renu Tari 50
Which aspects do you think these


companies ignored?????
 Product Portfolio

It shows the range of products a company has in development or

available for consumers at any one time.

Product Portfolio

It shows the stages that products go through from development

to withdrawal from the market
 Product Life Cycle ( PLC )
ØProduct sales pass through distinct stages, each posing different
challenges, opportunities, and problems to the seller

ØContributes to strategic marketing planning

ØProfits rise and fall at different stages of product life cycle

ØProducts require different marketing, financial,

manufacturing, purchasing, and human resource
strategies in each life cycle stage.

ØMay help in forecasting and managing cash flow

Product Life Cycle
Diagram )
Introduction Stage
ØSlow sales volumes to start
ØDemand has to be created
ØCustomers have to be prompted to try the
product
ØMakes no money at this stage
o
Growth Stage
ØCosts reduced due to economies of scale
ØSales volume increases significantly
ØProfitability begins to rise
ØPublic awareness increases
ØCompetition begins to increase with a few
new players in establishing market
ØIncreased competition leads to price
decreases
o
Maturity Stage
ØCosts are lowered as a result of production
volumes increasing and experience curve
effects
Øsales volume peaks and market saturation is
reached
Øincrease in competitors entering the market
Øprices tend to drop due to the proliferation of
competing products
Øbrand differentiation and feature diversification is
emphasized to maintain or increase market
share
ØIndustrial profits go down
Saturation and Decline Stage

ØCosts become counter-optimal

ØSales volume decline or stabilize
ØPrices, profitability diminish
ØProfit becomes more a challenge of
production/distribution efficiency than
increased sales
o
 Market Growth

Market Share
 Introduction
ØBCG Matrix:- Boston Consulting Group analysis

ØCreated by Bruce Henderson in 1968

ØBCG Matrix is also known as :

o Portfolio Evaluation Matrix
o Growth Share Matrix
oStrategic Business Unit Analysis

ØUsage of BCG Matrix:

o Provides a frame work for allocation
of resources among different business
unit.
o Allows one to compare many business
units at a glance
 STARS
High growth, High market share

Ø Stars are leaders in business.

Ø
Ø They also require heavy investment, to maintain its large
market share.
Ø
Ø It leads to large amount of cash consumption and cash
generation.
o
o
o
 CASH COWS
LOW GROWTH, HIGH MARKET SHARE


Ø They are foundation of the company

and often the stars of yesterday.
Ø
Ø They generate more cash than
required.
Ø
Ø They extract the profits by investing
as little cash as possible
o
QUESTION MARKS
HIGH GROWTH, LOW MARKET SHARE
Ø Most businesses start of as question
marks.
Ø They will absorb great amounts of
cash if the market share remains
unchanged, (low).
Ø Why question marks? Question
marks have potential to become
star and eventually cash cow but
can also become a dog.
Ø Investments should be high for
question marks.
DOGS
LOW GROWTH, LOW MARKET SHARE

Ø Dogs do not have potential to bring in

much cash.
Ø Number of dogs in the company should
be minimized.
Ø Business is situated at a declining
stage.
 Product mix of Parle

BISCUITS BEVERAGES
Hide & Seek Frooti
Parle-G Bailley
Hide & Seek Bourbon Grapoo Fizz

Milk Shakti LMN

 Biscuits
STAR Question Mark

Hide & Seek Hide & Seek

Bourbon
Market Growth

Cash Cows Dogs

Parle - G Milk
Shakti

Market Share
 beverages
STAR Question Mark

Frooti Grapoo Fizz

Market Growth

Cash Cows Dogs

Bailley LMN

Market Share
Sales
Development Introduction Growth Maturity Saturation Decline

Time
benefits
ØBCG MATRIX is simple and easy to understand.
ØIt helps you to quickly and simply screen the opportunities
open to you, and helps you think about how you can make
the most of them.
ØIt is used to identify how corporate cash resources can best
be used to maximize a company’s future growth and
profitability.
 limitations
ØBCG MATRIX uses only two dimensions, Relative market
share and market growth rate.
ØProblems of getting data on market share and market
growth.
ØHigh market share does not mean profits all the time.
ØBusiness with low market share can be profitable too.
o
o
Thank You