Marketing Matrix

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

Submitted to:
Mrs. Deepa S
Faculty of Marketing
Symbiosis Institute of International Business, Pune
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 strength
of the business unit. Some factors that can be used to
determine 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 by

multiplying the estimated value of each factor by the
factor'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
 STARS
High 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 COWS
Low 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 MARKS
High 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.
DOGS
Low 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
 Stars
Nescafe (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 Cows
Maggi 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 Marks
Maggi 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.
 Dogs
Nestle 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 PRESENT MARKET NEW MARKET

MARKET

PRESENT MARKET NEW PRODUCT

MARKET PENETRATION DEVELOPMENT
(Selling more of the
same products to the (Selling new products to
same types of people) existing customers)

NEW MARKET MARKET DIVERSIFICATION

DEVELOPMENT
(Selling new products to
(Selling of existing new)
products to new types
of consumers)
Market Penetration Strategy
This 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 Strategy
This 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 Strategy
An 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.h
 http://www.quickmba.com/strategy/matrix/ge-mckinsey