Submission Date: 11/10/2013 Submission Time: 9 A.M.

MARKETING ENVIRONMENT AND ANALYSIS

ASSIGNMENT

BCG MATRIX OF PEPSICO

Submitted to

Dr.RitanjaliMajhi

NIT Warangal

Submitted by

Arjun C J

Roll No: 138913

MBA- I year
INTRODUCTION
In 1976, Apple Computer, Inc. was established and was incorporated in 1977. Apples first product
was the Apple I which began the personal computer revolution. In 2007, Apple Computer, Inc.
changed their name to Apple, Inc. They made this change because they shifted their focus from only
producing computers to producing other products for industries such as entertainment and mobile
telecommunications.

With Apples diversified product line, the BCG matrix becomes an invaluable analytical tool. The
graph above provides guidance for future decisions in resource allocation. The BCG matrix shows
that overall, Apple has a strong portfolio. The company shines with its Cash Cow product iTunes, Star
products such as iPhones and iPods, and Question Mark products, such as Mac OS Xs and Mac
software.

The placement of the Mac OS Xs product line and the Mac software in the Question Mark category
shows their potential to either gain market share or degenerate to the Dog category. In both cases,
current statistics show high growth rates and low relative market shares. The Mac OS X boasts a
growth rate of 31.7% with a relative market share of .09. Mac software fares similarly, with a growth
rate of 32% and a market share of .01. This rapid growth means the products consume more than they
generate, thanks to their low market share. Such low market shares might suggest that Apple divest
itself of its computer business and focus on its rapidly growing Star products. However, it is obvious
that the market synergies created between their computer business and its other products are
invaluable and that divesting the Mac OS X and Mac software lines would only be likely to hurt its
Star and Cash Cow products.

BCG MATRIX
Larger organizations often find it hard to decide in which proportion, they should allocate resources
among different small business units. There are often smaller segments, products and business lines
which combined together to form a larger business unit. The business portfolio will perform best if the
organisation will stress on its strengths and avoid its weaknesses and exploit the striking opportunities
that will bring maximum benefit for the organization both financially and in the form of increased
market share. For this purpose, an organization must take following in to account.

1) First of all, critically analyse its present position, relevant market share and also taken to
consideration the stage of the product life cycle our products are in.

2) Adopt new development strategies for adding new product lines, divesting any of the current ones
on the basis of poor performance or loss of market share or if the product is on declining stage of
product life cycle. There are several methods which could be used for portfolio planning but BCG
Consulting Group or BCG matrix is the one which is being used most often. For this purpose
anorganization first of all has to categorize its Strategic Business Units. An SBU in anorganization
can be defined as the smallest business unit that has a distinct operations and objectives, can generate
its own cash independent of other business units and an organization can make plannings for this
SBU independent of other business segments. It could be a separate division, department, product
line, separate Brand name or separate geographical location, its all depends on the organisation of the
business entity. According to BCG matrix, the SBUs are divided in to four categories, The Stars, The
Cash Cows, the Dogs & finally The Dogs
Apple BCG Matrix
QUESTION MARK
Question Marks are the products in which our organization has relatively lower market share but there
are lots of growth opportunities in the market. This reveals that if we can invest further in research
and development and product innovation we can capture further market share.

Mac
The Mac software in the Question Mark category shows their potential to either gain market share or
degenerate to the Dog category. In both cases, current statistics show high growth rates and low
relative market shares.
Mac software fares with a growth rate of 32% and a market share of .01. This rapid growth means the
products consume more than they generate, thanks to their low market share.
The reason for Macs low market share is because of Microsofts dominance in the OS market. Such
low market shares might suggest that Apple divest itself of its computer business and focus on its
rapidly growing Star products.
However, it is obvious that the market synergies created between their computer business and its
other products are invaluable and that divesting the Mac OS X and Mac software lines would only be
likely to hurt its Star and Cash Cow products.

STAR
These are the products or Businesses that are outperforming their rivals in the market, having greater
market share than their counterparts and there are greater opportunities in the market for growth.

iPhone & ipad

I have categorized iPhone and iPod in Star category which means they both need further investment
in product development and there are greater opportunities available in the market for growth. Latest
figures reveal that the growth rate for iPods is currently 28% and for those of iPhones its 48%.Apple
enjoys 60% more market share in iPod than its closest rival Scandisk in the market. In iPhones,
Apple is not the market leader but has 28% market share where manufacturer of Blackberry RIM has
41% market share. So, Apple is a challenger for RIM with significant proportion of relative market
share. Both iPhone and iPods are very critical for Apples success in the long term. Organisations need
Stars which will eventually later become Cash Cows and will be critical for future cash flow
generations for the organization.

CASH COW
These are the products in which our organization normally enjoys market leaders position having
maximum market share but there are lesser or no further opportunities for growth. These products
have reached maturity stage of their product life cycle and we dont need to invest further in to these
products. I have placed Apples iTunes digital downloading software as a cash cow. Apple clearly is a
market leader in this market segment with 82% market share, its closest rival is Napster with only 3%
relative market share. The huge difference of 79% shows that Apple has outplayed all its counterparts
in this market segment. Growth rate for iTunes is 7.6% which indicates that it is a stable and mature
product and it does not needs further heavy investments for product development by Apple Inc. This
stream of cash flow is essential for providing cash for Question mark products.
DOGS
Dogs are the products in which the organization has lower market share than its competitors and the
market in which it operates is not very attractive as well. So, there are lower or no growth
opportunities even if we decide to invest further. These products may generate sufficient cash to reach
neither break-even point, so organization is neither making any lose nor making profit. So, it will not
be a sensible decision to invest further in these products by business point of view.

Apple TV

In our case Apple TV could be considered underdog category as Apple is not a market leader in this
market segment and does not enjoys majority percentage of relevant market share and there are few
chances of capturing further market share even further investment in product development is done.

CONCLUSION
Companies like APPLE perceived that their brand and products have some personalities and
characteristics in which clients and customers use as a channel for expressing themselves or to
experience the predicted emotional benefits that differentiate a specific brand from another. The
considered product characteristics evolved through the different approaches used by the company and
it is the one used for identifying which products should be put in the stars, dogs, cash cows or
question marks categories in the BCGmatrix.

Accordingly, there are various management approaches that the company may use to have a strong
and effective brand image and to determine which brands are more appealing to the market and which
brands are not doing well. In order to build a strong brand and effective image, the management who
of APPLE should think of two things in planning a strategy. Such things are first is to sell the service
of the company as a short-term goal and second is to build a strong brand image in the long run.

REFERENCES
http://en.wikipedia.org/wiki/Apple_Inc.

https://www.apple.com/in/

http://www.scribd.com/doc/75212531/BCG-MATRIX-APPLE-INC