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MKTG611 Marketing Management

Published : 17-Sep,2021  |  Views : 10

Question:

Title: The Difficulty With New Brands

Marketing Theme: Product Development, Branding, Pricing etc.

Answer:

Boston Consulting Group Model categories

Boston Consulting Group Model (BCG Model) is a portfolio planning model that is founded on the deduction that a company’s business units could be characterized into four categories:

  • Question Marks
  • Stars
  • Cash Cows
  • Dogs
Dogs – These products hold a low market share or possess and low growth in the market. Generally, they are of no use investing as the generate low cash returns. However, some dogs might be profitable if continued for a long period of time. Thus it is important that deeper analysis is performed of each brand or SBU for ensuring they are unsuitable for investment or needs to be divested (Stern and Deimler 2012).

Strategic choices: liquidation, divestiture, retrenchment

Cash cows – Cash cows contain the most productive brands and they need to be “milked” so that as much cash can be extracted from them possible. These products play in low growth markets but possess high market share. Corporates must invest in cash cows for inducing growth and supporting them in continuing their current market share (Kiron et al.2013).

Strategic choices: divestiture, retrenchment, diversification, product development

Stars – Stars are products that play in high growth markets and even possess high market share. These are both cash users and cash generators. However, not all stars possess cash flow.  With more investments, stars can become cash cows and generate positive cash flow (DaSilva and Trkman 2014).

Strategic choices: product development, market development, market penetration, horizontal integration, vertical integration

Question marks/Problem Child – These are products in high growth markets and possess low market share. These brands require much closer attention and time. They possess market share in fast growing markets, all the while consuming huge amounts of cash and simultaneously losing it (Haanaes et al.2013).

Strategic choices: divestiture, product development, market development, market penetration

SBUs representing the BCG Model categories

To look at the four quadrants of the BCG model, SBUs or brand names have been used below for representing each quadrant:

  1. Dogs – The market advice generally provided for these products is to eliminate them from the product portfolio as they extensively channel down from resources. As an illustration, in the locomotive sector, once a car line is closed up, there still exists the need for spare parts. Like, when SAAB reduced trade and production of new cars, they started a completely new trade of selling SAAB parts.
  2. Question marks – These products necessitate a lot of investing to push them ahead. As such, Rovio, the creators of Angry Birds game, have many other games under their hood, which are actually not known of.
  3. Cash cows – These products need to be extracted from as much possible. Procter & Gamble, who manufacture Pampers nappies, also manufacture Lynx deodorants, making the company justifiably mentioned as a cash cow company.
  4. Stars – M&S lingerie are known as the go-to place for ladies under garments when the choice or substitutes are low. M&S lingerie is still UK’s market forerunner in this segment, even in a multi-channel environment, with high growth and high market share.

References

DaSilva, C.M. and Trkman, P., 2014. Business model: what it is and what it is not. Long range planning, 47(6), pp.379-389.

Haanaes, K., Michael, D., Jurgens, J. and Rangan, S., 2013. Making sustainability profitable. Harvard Business Review, 91(3), pp.110-115.

Kiron, D., Kruschwitz, N., Reeves, M. and Goh, E., 2013. The benefits of sustainability-driven innovation. MIT Sloan Management Review, 54(2), p.69.

Stern, C.W. and Deimler, M.S. eds., 2012. The Boston consulting group on strategy: Classic concepts and new perspectives. John Wiley & Sons.

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