MARKETING MANAGEMENT-ASSINGMENT 5

1.objective, advantages and disadvantages

a) BCG Matrix

Objective

Benefits and Limitations of the BCG-Matrix

Benefits of the BCG-Matrix:

 The BCG-Matrix is helpful for managers to evaluate balance in the companies’s current
portfolio of Stars, Cash Cows, Question Marks and Dogs.
 BCG-Matrix is applicable to large companies that seek volume and experience effects.
 The model is simple and easy to understand.
 It provides a base for management to decide and prepare for future actions.
 If a company is able to use the experience curve to its advantage, it should be able to
manufacture and sell new products at a price that is low enough to get early market share
leadership. Once it becomes a star, it is destined to be profitable.

Limitations of the BCG-Matrix:

 It neglects the effects of synergies between business units.

 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.
 The problems of getting data on the market share and market growth.
 There is no clear definition of what constitutes a “market”.
 A high market share does not necessarily lead to profitability all the time.
 The model uses only two dimensions – market share and growth rate. This may tempt
management to emphasize a particular product, or todivest prematurely.
 A business with a low market share can be profitable too.
 The model neglects small competitors that have fast growing market shares

b) ansoff matrix

Objective

Introduction to the Ansoff matrix. The Ansoff product/ market matrix is a tool
that helps businesses decide their product and market growth strategy.
Ansoff's product/ market matrix suggests that a business' attempts to grow
depend on whether it markets new or existing products in new
orexisting markets

Advantages

Advantages

 It forces market planners and management to think about the expected risks of moving in a
certain direction

 It lays out possible strategies for growth

 Discipline: it focuses the business

 Sets out aims and objectives

 Presentable to stakeholders

 Assessment of alternatives- shows opportunity cost

 Creates a risk aware culture

 Indicates level of risk and relevant risk

Disadvantages

Disadvantages

 Fails to show that market development and diversification strategies require a change to
every day running of the business

 Only a theoretical model

 Does not take into account the activities of external competitors

 Paralysis by analysis

 Plans too optimistic e.g. transferrable skills

 Accurate predictions are difficult- unforeseen events

 Conflicting objectives of stakeholders

c) GE matrix

Objective

The GE McKinsey matrix is a nine-box matrix which is used as a strategy tool.

It helps multi-business corporations evaluate business portfolios
andprioritize investments among different business units in a systematic
manner. This technique is used in brand marketing and product management