Competition

Decide-Dominate-And-Destroy
Kotler on
Marketing
Poor firms ignore their
competitors; average firms
copy their competitors;
winning firms lead their
competitors.
Eg. Dell with IBM / HP, Nirma with Surf,
Pepsi with Coke in India and so on…
The Boston Matrix
• The Boston Matrix:
• A means of analysing the product portfolio and informing decision making
about possible marketing strategies
• Developed by the Boston Consulting Group – a business strategy and
marketing consultancy in 1968
• Links growth rate, market share and cash flow
BCG Matrix
• Method focuses on the potential of a firm’s
existing successful products to generate cash that
the firm can use to invest in new products
• New products are chosen for their potential to
become cash generators
• Two dimensions:
• Market growth rate
• Relative market share

2-4
Market attractiveness & Competitive strength is
also important.
The Boston Matrix
Market Growth

High Problem Children Stars

Dogs Cash Cows

Market Share
Low High
 BCG Matrix: Stars

• SBUs with dominant market share in high-growth markets

• requires funding to keep up with production and promotion demands
• strategies seek to maximize market share in the face of increasing
competition

2-7
The Boston Matrix
• Classifies Products into four simple categories:
• Stars – products in markets experiencing high growth rates with a
high or increasing share of the market
- Potential for high revenue growth
The Boston Matrix
• Implications:
• Stars:
• Huge potential
• May have been expensive to develop
• Worth spending money to promote
• Consider the extent of their product life cycle in decision making
 BCG Matrix: Cash Cows
• SBUs with dominant market share in a low-growth
potential market
• product is well established and market share can be
maintained with minimal funding
• firms milk cows of profits to fund growth of other
products in portfolio

2-10
The Boston Matrix
• Cash Cows:
• High market share
• Low growth markets – maturity
stage of PLC
• Low cost support
• High cash revenue – positive cash
flows
The Boston Matrix
• Implications:
• Cash Cows:
• Cheap to promote
• Generate large amounts of cash –
use for further R&D?
• Costs of developing and promoting
have largely gone
• Need to monitor their performance –
the long term?
• At the maturity stage of the PLC?
BCG Matrix: Question Marks
• SBUs with low market shares in fast-growth markets
• sometimes called problem children
• the firm has failed to compete effectively
• The dilemma? Investing more money into the SBU may
• improve market share in a high potential market OR
• result in negative cash flow and failure

2-13
 The Boston Matrix
• Problem Child:
- Products having a low market share
in a high growth market
- Need money spent to develop them
- May produce negative cash flow
- Potential for the future?

Problem children – worth spending

good money on?
The Boston Matrix
• Implications:
• Problem Children:
• What are the chances of these products securing a hold
in the market?
• How much will it cost to promote them to a stronger position?
• Is it worth it?
BCG Matrix: Dogs
• SBUs with small market share in a slow-growth market
• specialized products in limited markets unlikely to grow
• firms may sell dogs to smaller firms or eliminate product from market

2-16
 The Boston Matrix
• Dogs:
• Products in a low growth market
• Have low or declining market share
(decline stage of PLC)
• Associated with negative cash flow
• May require large sums of money to
support

Is your product starting to

embarrass your company?
The Boston Matrix
• Implications:
• Dogs:
• Are they worth persevering with?
• How much are they costing?
• Could they be revived in some way?
• How much would it cost to continue
to support such products?
• How much would it cost to remove
from the market?
 Business Mix of ITC Ltd.
FMCG
• Cigarettes
• Foods
• Lifestyle Retailing
• Greeting, Gifting & Stationery
• Safety Matches
• Agarbattis

Paperboards & Packaging

• Paperboards & Specialty Papers
• Packaging

Agri – Business
• Agri products
• E Choupal

Hotels
Group Companies
• ITC Infotech; etc
Market share of ITC Ltd.
Outstanding market leader
• Cigarettes, Hotels, Paperboards, Packaging and Agri-
Exports.
Gaining market share
• Nascent businesses of Packaged Foods &
Confectionery, Branded Apparel and Greeting Cards.
Segment Dominance Contribution %
Revenue PBIT
Cigarettes 70% share 77.0% 87.7%

Paper & Packaging board – No. 7.3% 10.7%

Packg. 1 in Asia
Agri 1of the largest xporters 7.0% 3.7%
business from India
Hotels ITC Group ranks No.2 4.3% 5.4%

FMCG 20% share of greeting 4.4% -7.5%

(Others) cards market,
'Aashirvaad' atta is
No.1 in branded
segment
The BCG Matrix for ITC Ltd.
Stars ?
•Hotels •FMCG- Others
•Paperboards/
Packaging.
•Agri business.
Cows Dogs
•FMCG-Cigarettes •Maybe ITC Infotech.
 BCG MATRIX
HIGH AMUL ICE CREAM

BUSINESS
AMUL CHEESE
AMUL
GROWTH CHOCOLATE
RATE

AMUL
LOW AMUL CHOCOLATE
BUTTER
DRINK
HIGH LOW
RELATIVE MARKET SHARE
ANSOFF’S MATRIX
Background
• Long-term business strategy is dependent on planning for their
introduction
• Ansoff Matrix represents the different options open to a marketing
manager when considering new opportunities for sales growth
Variables in the matrix
Two variables in Strategic marketing Decisions:

• The market in which the firm was going to operate

• The product intended for sale
• In terms of the market, options:
• Remain in the existing market
• Enter new ones
In terms of the product, the two options are:
• selling existing products
• developing new ones
 Existing PRODUCTS New

Existing INCREASING RISK

MARKET
PRODUCT
PENETRATION
DEVELOPMENT

INCREASING RISK
Sell more in existing
Sell new products in
Markets
existing markets
MARKETS

MARKET
EXTENSION DIVERSIFICATION

New Achieve higher Sell new products in new

sales/market share markets
of existing products
in new markets
 Existing PRODUCTS New

Existing INCREASING RISK

MARKET
PENETRATION

INCREASING RISK
Sell more in existing
Markets

MARKETS

New
MARKET PENETRATION
• This is the objective of higher market share in existing markets

• E.g. in 2000, Mitsubishi announced a 10% reduction in prices in the UK in

order to encourage purchases
 Existing PRODUCTS New

Existing INCREASING RISK

MARKET
PENETRATION

INCREASING RISK
Sell more in existing
Markets

MARKETS

MARKET
EXTENSION

New Achieve higher

sales/market share
of existing products
in new markets
MARKET EXTENSION
• This is the strategy of selling an existing product to new markets. This
could involve selling to an overseas market, or a new market segment

• Nintendo are making hand held games consoles (e.g. DS) appeal to the
adult/grey market by introducing games such as Brain Train
 Existing PRODUCTS New

Existing INCREASING RISK

MARKET
PRODUCT
PENETRATION
DEVELOPMENT

INCREASING RISK
Sell more in existing
Sell new products in
Markets
existing markets
MARKETS

MARKET
EXTENSION

New Achieve higher

sales/market share
of existing products
in new markets
PRODUCT DEVELOPMENT
• Least risky of all four strategies
• This involves taking an existing product and developing it in existing
markets
• E.g. Coca-Cola. This has been developed to have vanilla, lime, cherry and diet
varieties (amongst others) in the SOFT DRINKS market
 Existing PRODUCTS New

Existing INCREASING RISK

MARKET
PRODUCT
PENETRATION
DEVELOPMENT

INCREASING RISK
Sell more in existing
Sell new products in
Markets
existing markets
MARKETS

MARKET
EXTENSION DIVERSIFICATION

New Achieve higher Sell new products in new

sales/market share markets
of existing products
in new markets
DIVERSIFICATION
• This is the process of selling different, unrelated goods or services in
unrelated markets
• This is the most risky of all four strategies

• E.g. the Virgin group

Business Strength Matrix