Brand Management

Lecture 13
Assessing Company’s Market
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Objectives:

 Understand the concept of BCG Matrix

 Identify relative market share and growth market rate
 Discuss each quadrant of BCG Matrix
 Understand the concept of market penetration
Do you know which company's products they are from?
Amul
?
So how would Amul decide which product to keep and which
product to discard?
BCG Matrix

An analysis of a company's products using a BCG matrix is a tool for long-term strategic planning. Companies
can use the matrix to find new growth opportunities and choose their future investment strategy
BCG Matrix

This matrix categorizes businesses as high or low based on industry growth rate and relative market
share

 Relative Market Share = SBU Sales this year leading competitors sales this year
 Market Growth Rate = Industry sales this year - Industry Sales last year
BCG Matrix - Quadrants
1. Stars Quadrant

 One example of Stars is the Coca-Cola product Kinley, bottled water. This example is appropriate since, on
a global level, the mineral water industry is still seen as a slowly expanding sector
 The industry's growth potential for this company product has expanded due to the growing demand for
bottled water
2. Cash Cow

 One of these Cash Cows is Coca-Cola. This product is offered in a developed beverage market that spans 200
nations. The final beverages are made accessible to the market with the assistance of the bottling partners in various
places

 The company generates a sizeable portion of its revenues from its final goods. It is advised for a company to
maintain a high sales volume in a mature industry because the business unit is, on the whole, a reliable source of
income
3. Dogs

 One example of dogs is diet coke, a Coca-Cola product. It was introduced to provide consumers with a
somewhat calorie-efficient beverage choice

 This business unit's sales dropped due to the brand's failure to capture consumers' attention. Since the soda
market has been established recently, there are now few opportunities for new goods to grow
4. Question mark

 The Coca-Cola product Fanta is one example where the business units might be viewed as a question mark.
Due to the brand's inability to achieve global popularity like Coke

 As a result, the brand is becoming less well-known. However, it has successfully obtained a sizable sales
volume in several locations
Example: BCG Matrix of Nestle
Cash Cow: Nestle

 Certain items have unquestionably been the Cash Cows for

Nestle. They are Maggi Noodles, Nescafe, and KitKat and
Munch, two of Nestle's well-known chocolate products

 Maggi Noodles has a market share of between 80 and 85 percent

and a strong level of consumer loyalty
Stars: Nestle

 The Star quadrant of the Nestle BCG Matrix is where

Nestle's Mineral Water and Nescafe Coffee (like
Nescafe Latte) are located

 These items could later generate a higher return on

investment due to the rising number of health-
conscious consumers
Question Mark: Nestle

 Some of the milk and milk-based products from the

Nestlé brand include Nestle Everyday, Nestlé Slim, and
Nestlé Milk Maid. They fall within the group of
question marks
Dog: Nestle

 In my opinion, Koko Crunch and Nestle Milo fall under

this heading. They didn't have a firm hold on the
market
Nestle BCG Matrix
Example: BCG Matrix of Pepsico
 Time to Create BCG Matrix
Activity Create a BCG matrix of Mother Dairy
? How do you use the BCG matrix
to strategize?
How to strategize your business?

 Increase your investment in Stars and Question

Marks if your objective is to concentrate on
innovation

 Keep a product in the same sector and don't do

anything to it if you can't put more money into it

 By lowering your investment and obtaining the

most cash flow possible from a product, you can
raise its general profitability

 Transfer the money used to purchase a product to

another project
How to strategize your business?

● The long-term growth of any product is impossible

to forecast because consumer preferences are
constantly shifting

● You should frequently update and improve your

BCG matrix as market conditions change
●
● You should be prepared to leave if the stakes are
raised since, for example, a product that was a
Question Mark could change suddenly into a Dog
Example: Coca-Cola

 Question Mark: Diet Coke and Minute Maid

 Star: Kinley and Dasani water bottle

 Cash Cow: Titular drink

 Dog: Sodas
 Breakout Session
Why does Diet Coke and Minute Maid of coca-
cola company fall under question mark quadrant?
Steps taken to create BCG Matrix
Steps taken to create BCG Matrix

 We examine L'Oreal's business sectors and overall growth to understand better

STEP 1 Choose the product/firm/brand
STEP 2 Identify Market

 The chosen market is the Cosmetics Industry which includes primarily- Skincare, Makeup, Haircare,
Hair colour and Fragrances
STEP3 Calculate Relative Market Share
STEP 4 Find out Market Growth rate

Market Growth Rate = Industry sales this year - Industry Sales last year
Overall Growth rate in Cosmetics Industry = 4.8%
STEP 5 Draw the circles on a matrix
?
Do you know?
BCG Matrix and market penetration are connected?
Market Penetration

 Market penetration is the proportion of a product or service's predicted total market that consumers are using
Example - SmartPhones

 Samsung entered the market with the Penetration Pricing Strategy as the Apple iPhone captured everyone's
attention with its fantastic OS

 It offered a smartphone at a lesser cost, boosting Samsung's sales. Later, several brands entered the market,
adopting the same tactic
Market Penetration

https://www.youtube.com/
watch?v=AnOevGzAP4M
Example - Digital Entertainment Companies

 Digital entertainment firms like Netflix, Amazon Prime, Spotify, and others are attracting a lot of attention in this
age of smartphones

 To draw in more customers, Netflix offers new users a free monthly trial subscription
Example - Food Industry

 In the food industry, penetration pricing is prevalent

 Most packaged food industries obtain market recognition by introducing their products at a cheaper cost than their
rivals. Once the products get more well-known, the prices go up
Example - Telecom Industry

 Within a short time of its inception, the Reliance Jio network in India became the largest mobile network
 It employed the miraculously effective penetration price technique
 The network gave clients free access to telecom services, gaining Jio more than 387 million subscribers
worldwide. Later, Jio began to charge for network usage
Activity

Give 3 examples of
market penetration