Derrick

Ice Cream
Company
Group 5
Section D

Akanksha Sharma BD21004

Bhavya Ladhani BD21021
Juhi Sharma BD21018
Rachita Jain BD21033
Rishabh Panda BD21033
Umang Beswal BD21050
 1 Introduction

2 Deconstructing
the BCG matrix

3 The Y and X axis

4 BCG Matrix

5 Recommendations

Table of
Contents
Introduction

The case very beautifully highlights the underlying architecture of the BCG matrix. It
provides an excellent illustration to showcase the sources of revenue and cost for
the 6 customers mentioned in the case. Since, the case provides incomplete
information and does not specify any particular variable to approximate the Y-axis,
we need to quantify using the descriptive and qualitative information provided.

For developing a BCG matrix in this case, there are two possible factors can be used
as proxies for market growth rate. First, we can look at the growth rate of real
disposable income in the UK households. Based on the data by Office of National
Statistics (UK), the average growth rate of real disposable income is one percent
(2010-2021).

Secondly, we can also use cost as a factor to assess the customer profitability. This
is derived from the idea that BCG matrix assesses the relative performance of an
SBU based on its source of revenue (represented by relative market share) and the
cost structure (measured by market growth rate). Since, growth of a particular
industry commands for increased resources for innovation, meeting demand,
marketing and sales etc. Hence, a growing market needs more investment from
businesses. Based on the case facts, the cost assessment can be based on 3 factors:
1.Purchasing pattern
2. Delivery policy
3. Inventory holding

The qualitative assessment will allow us to quantify the cost strucutre and determine
the Y-variable. These 3 factors have been further quantified using a 0 to 5 scale
where all the factors are given equal weightage of 33% each and all the 6 customers
are ranked based on the 3 factors. The best performing customer in that category
will be accorded a 5, 0 to worst performer and 2.5 to average standing customer.

1
 Crafting the BCG matrix
Y = cost
X = revenue
The following table summaries the qualitative data about the
six major clients of Derrick's Ice Cream Company for
constructing the BCG matrix.

Ardron's Cahill's Donleavy's England Frankston

Butler Ices
Wafers Cones Ices Wedges Chocs

Unique Always pay Make

Large regular On-time
packaging late monthly Separate
orders payment
needs Demand all claims sales credit
Purchasing Low Require low
Large disounts even Require for each item
patterns discounts for discounts
discounts for when they are minimal Complex
volume and
volume not applicable discounts order details
orders commissions
orders

Require
multiple calls
Insist on free
for
deliveries
Bulk orders assisstance in
Predictable despite being Require no Daily delivery
Delivery on admin
delivery 241 kms special needed
policy infrequent operations,
requests away from packaging

basis merchandisin
Derrick's
g stock and
base
in-store
displays

Uncommon
requets for
Threatened to
crisis
take their
deliveries due Best in
Predictable business No No
Inventory to poor business
inventory elsewhere if information information
holding inventory inventory
requirements inentory available available
control procedures
demands are
procedures
not met
resulting in
stock-outs

Share in
19% 12% 25% 9% 14% 20%
total sales

2
 Relative
Purchasing Delivery Inventory

Total score customer
pattern policy holding
attractiveness

Ardron's
5 5 4 14 1
Wafers

Butler Ices 1 0 1 2 0.14

Cahill's
5 2.5 5 12.5 0.89
Cones

Donleavy's
0 1 0 1 0.07
Ices

England
4 1 2.5 7.5 0.53
Wedges

Frankston
0 1 2.5 3.5 0.25
Chocs

Relative Market Share (X-Axis)

Here, Cahill's Cones has been taken the market leader with 25% market share and the
relative market share has been calculated accordingly.

Market share Relative market Log

Customer
(% of Sales) share transformation

Ardron's Wafers 19 0.76 -0.27

Butler Ices 12 0.48 -0.73

Cahill's Cones 25 1 0.22

Donleavy's Ices 9 0.36 -1.02

England Wedges 14 0.56 -0.58

Frankston Chocs 20 0.80 -0.22

3
The BCG Matrix
QUESTION MARK STAR

DOG
CASH COW

4
Recommendations

As a customer, they are an important client amounting to 19%

of the total sales. At the same time, they are efficent in
inventory management with low discount demands and
predictable delivery requests. Depsite their question mark
status, they are a good fit for the company and hence Derrick
Ardron's Wafers
ice-cream should proactively collaborate to increase sales and
encourage them to increase their footprint in areas important
for Derrick Ice Cream. They can support them through more
discounts and financial assistance if needed for expanding their
distribution network.

Butler Ices demand unique packaging, large discounts and

insist on free delivery. It contributes to 12% of the total sales
with relatively low customer attractiveness. They have poor
inventory management procedures which lead to crisis
Butler Ices
deliveries while being 150 miles away. Being a dog customer,
Derrick should charge premium for the unique packaging,
collaborate and train Butler Ices in inventory management,
impose penalties to discourage crisis deliveries

As a star performer with largest share of Derrick's sales, it is the

best customer in terms of purchasing patternand inventory
holding. It is also efficient in inventory management with JIT
Cahill's Cones
scheduling with congruent systems. This partnership can be
leveraged to expand in outlying areas where Derrick does not
have a strong foothold in.

They are notorious for demanding discounts and insist on daily

deliveries while they pay late and are also threatening to exit
the business. They contribute to less than 10% of the total sales.
Donleavy's Ices Derrick Ice Creams should look and search for a replacement
for long term. In the short term, they must leavy penalties for
late payments, re-negotiate their terms of trade and charge
premium for crisis deliveries.

Similar to Ardron's Wafers, they have the potential to be a star

England Wedges performer. Proactive support in demand planning and
forecasting will help to alleviate the infrequent ordering.

With 20% share in sales, Frankston Chocs has potential to be a

cash cow if its sales are increased. There is a need to
restructure purchase arrangements and provide assistance in
Frankston Chocs
demand forecasting. They can be encouraged to increase sales
through cross-selling and increasing the average cart value
through rigorous on-ground marketing.
References
1. https://data.oecd.org/hha/household-disposable-income.htm
2. https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/mwb7/ukea
3. https://www.tandfonline.com/doi/abs/10.1080/0963928021000031457