Market Assessment- BCG

Matrix
 Sequence
• Market Assessment
• BCG Growth-Share Matrix
• Success/ Disaster sequence and limitations
 Market Assessment
• A market assessment is a comprehensive analysis of your
company’s competitors, consumers and other industry
stakeholders
• A critical part of your company documentation, a market
assessment enables your company to understand the need
and demand for its business offerings in the market
– It provides details on market opportunities, growth drivers and
barriers, industry cost structure, distribution channels, market trends,
key success factors, market competitiveness, and consumer
preferences
 Cont……..
• Conducting a market assessment study is critical for your company
whether you are looking to launch, expand your business or grow
your consumer base.
• It includes:
• Market Dynamics: Outlines the historical and forecasted market
growth rates, market segments, drivers and barriers, regulations
and market trends
• Competitive Landscape: Outlines the overall competitiveness of the
market, market share of key players, capability, opportunity and
threat analysis and competitive benchmarking
• Consumer Dynamics: Offers insights into consumers’ requirements,
preferences, purchase behavior, and maximum willingness to pay
 Pros of addressing Market
Assessment
• Risk mitigation by understanding market barriers,
regulatory scenarios, and competitive threats affecting
your business
– Improvement in your market position with the unique sales
proposition of your company’s offerings
– Maximum return on investments through understanding of
market dynamics and competitiveness
– Improvement in your company’s offerings and increased
revenue
– Assessment of consumers needs and willingness to pay
– Improvement in efficiency as it enables your company to
restructure based on market conditions
 Cons of not addressing Market
Assessment
• Increase in inefficiencies as business strategy is formulated
without adequate assessment of the market
• Potential operational inefficiencies due to inability to identify
market opportunities and threats
• Increase in risk of financial loss with product and services that
have limited attractiveness in the market
• Restriction on growth potential due to failure to expand into
adjacent markets and launch new customized offerings
 Market Share and Growth
• Market share represents the percentage of an industry, or a
market's total sales, that is earned by a particular company over a
specified time period
• Market share is calculated by taking the company's sales over the
period and dividing it by the total sales of the industry over the
same period
– Market share is the percentage of the total revenue or sales in a market
that a company's business makes up. For example, if there are 50,000
units sold per year in a given industry, a company whose sales were
5,000 of those units would have a 10 percent share in that market
• Market growth is the change in a market's size over a given period,
typically expressed as a positive or negative percentage. It
quantifies the rise in demand for a product or service within a
market. Market growth is directly proportional to consumer
demand
 BCG Matrix
• The BCG Growth-Sharing Matrix is the most famous and
simple portfolio-planning matrix
• BCG Matrix is an apparatus utilized to incorporate
methodology to break down specialty units or product
offerings dependent on two factors: relative piece of the
overall industry (share) and the market development rate
(growth)
• By joining these two factors into a matrix, an organization can
plot their specialty units as needs are and figure out where to
dispense extra (financial) assets, where to money out, and
where to pull off shares
 What is BCG Matrix?
• The Boston Consulting Group's item portfolio matrix (BCG
matrix), otherwise called the Growth/Share Matrix, is a vital
arranging device that enables a business to consider
development openings by inspecting its arrangement of items
to choose where to contribute to suspend or create things
– The primary reason for the BCG Matrix is accordingly to settle on
speculation choices on a corporate level. It's otherwise called the
Growth/Share Matrix
• The Matrix is separated into four quadrants dependent on an
investigation of market development and the relative peace of
the overall industry
 Cont………
• Depending upon how well the unit and the business
are doing, four different classification names can be
credited to every group:
– Dogs
– Question Marks
– Cash Cows
– Stars
Cont………
 Question Marks
• Ventures or start-ups usually start off as Question Marks. Question
Marks (or Problem Children) are businesses operating with a low
market share in a high growth market

• Most businesses start as question marks

• Needs heavy investment
• Have the potential to become star and eventually Cash Cow but can
also become Dog

Tips: Grow sales by increasing market share. Use cash from Cash
Cows to support required investments.
 Strategies For Question marks
• New Customer acquisition strategies are the best
strategies for converting Question marks to Stars or
Cash cows.
• Time to time market research also helps in
determining consumer psychology for the product as
well as the possible future of the product.
 Stars
• Stars are business units with a high market share (potentially
market leaders) in a fast-growing industry
• Generate large amounts of cash due to their high relative
market share but also require large investments to fight
competitors and maintain their growth rate
• Leads to large amount of cash consumption and cash
generation
Strategies For Stars:
• Customer satisfaction programs
• Loyalty programs
• Promotional methods
 Cash Cows
• (Low Growth, High Market Share)
• Foundation of the company and Stars of yesterday.
Generate more cash than required
• Eventually market growth might decline and revenues
stagnate. At this stage, your Stars are likely to transform
into Cash Cows
• Cash cows therefore typically generate cash in excess of the
amount of cash needed to maintain the business
Tips: Maintain the strong market position and defend your
market share. Take advantage of sales volume and leverage
the size of operations. Support other businesses
 Cont………
• Cash Cows ultimately bring balance and stability to a portfolio
Strategies for cash cows
Retention of the market share
▪ Customer satisfaction programs
▪ Loyalty programs
 Dogs /pets
• (Low Growth, Low Market Share)
• Do not have potential to bring in much cash
Business is situated at a declining stage
• These units typically break even (they neither create nor
consume a large amount of cash) and generate barely enough
cash to maintain the business’s market share
• Dogs are likely to be divested or liquidated

Tips: Optimize your current operations. Get rid of all non-

value-added activities and features. Reposition your offering
to generate positive cash flow or sell this business.
•
 Success/ Disaster Sequence in BCG
Matrix
• Success sequence of BCG matrix- happens when a
question mark becomes a Star and finally it becomes
a cash cows
• Disaster sequence in BCG Matrix- happens when a
product which is a cash cow, due to competitive
pressure might be moved to a star. It fails out from
the competition, and it is moved to a question mark
and finally it may have to be divested because of its
low market share and low growth rate
 Limitations of BCG Matrix
• Classifies businesses as low and high, but generally businesses can
be medium also. Thus, the true nature of business may not be
reflected
• Market is not clearly defined in this model
• High market share does not always lead to high profits. There are
high costs also involved with high market share.
• Growth rate and relative market share are not the only indicators of
profitability. This model ignores and overlooks other indicators of
profitability
• At times, dogs may help other businesses in gaining competitive
advantage. They can earn even more than cash cows sometimes
• This four-celled approach is considered as to be too simplistic