Product life cycle (PLC) & Boston Consultancy Group (BCG) MBA ppt

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The ppt gives details info about BCG Matrix as well as Product Life Cycle.

The ppt project is on study of Automobile industry, done during my MBA (M.U).

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Product life cycle (PLC) & Boston Consultancy Group (BCG) MBA ppt

  1. 1. PRESENTED TO PROF. RAFANA KAZI FROM: PRATIK THAKKAR (MMM-14) ALLANA INSTITUTE OF MANAGEMENT STUDIES CG MATRIX & PRODUCT LIFE CYCLE OF MAHINDRA & MAHINDRA
  2. 2.  BOSTON CONSULTING GROUP (BCG) MATRIX is developed by BRUCE HENDERSON of the BOSTON CONSULTING GROUP IN THE EARLY 1970’s.  According to this technique, businesses or products are classified as low or high performers depending upon their market growth rate and relative market share.
  3. 3.  It is a portfolio planning model which is based on the observation that a company’s business units can be classified in to four categories:  Stars  Question marks  Cash cows  Dogs It is based on the combination of market growth and market share relative to the next best competitor.
  4. 4. 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
  5. 5. 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
  6. 6. The Boston Matrix  Cash Cows: ◦ High market share ◦ Low growth markets – maturity stage of PLC ◦ Low cost support ◦ High cash revenue – positive cash flows
  7. 7.  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 The Boston Matrix Is your product starting to embarrass your company?
  8. 8.  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? The Boston Matrix Problem children – worth spending good money on?
  9. 9.  Mahindra Group is one of the largest corporate groups of India. It is a US $6.3 billion conglomerate with employee strength of over 50,000.  It is ranked amongst Forbes Top 200 list of the World's Most Reputable Companies and in the Top 10 list of Most Reputable Indian companies.
  10. 10. The origin of Mahindra group can be traced back to Oct 2, 1945, when Mahindra brothers J.C. Mahindra & K.C. Mahindra joined hand with Ghulam Mohammad, there after Mahindra & Mohammad was set up as a franchise of assembling JEEPS from WILLYS, USA.After independence of India in 1947 , Mahindra & Mohammad changed its name to Mahindra & Mahindra.
  11. 11.  Automobiles  Farm equipment  Trade & finance  Infrastructure  IT  Other specialty business
  12. 12.  Mahindra Automobiles have a strong and growing presence in international markets ◦ Yugoslavia, ◦ Bangladesh ◦ Sri Lanka ◦ Australia ◦ Uruguay ◦ South Africa in 2004 (Mahindra South Africa) ◦ Europe in 2005 (Mahindra Europe)
  13. 13.  Tractors  Two Wheelers  Utility Vehicles
  14. 14.  AMGR of Tractor industry = 18%  Market share of M&M = 29% (Market Leader)  2nd largest player is Tafe group (messy tractor)  Market share of Tafe group = 23%  RMS of M&M Tractor = 1.26x
  15. 15. 10% 12% 14% 16% 18% 20% 8% 6% 4% 2% 0% 0.1 x 0.2 x 1x 0.5 x 0.4 x0.3 x 10x 4x 2x BusinessgrowthRate Relative Market share HIGH LOW LOWHIGH TRADITIONALBCGMATRIX
  16. 16.  AMGR of two wheelers industry = 12%  Market Share of M&M two Wheelers = 1%  Market Share of Hero Honda = 52%  RMS of M&M two wheelers = 0.02x
  17. 17. 10% 12% 14% 16% 18% 20% 8% 6% 4% 2% 0% 0.1 x 0.2 x 1x 0.5 x 0.4 x0.3 x 10x 4x 2x BusinessgrowthRate Relative Market share HIGH LOW LOWHIGH TRADITIONALBCGMATRIX
  18. 18.  AMGR of Utility vehicle industry = 8.7%  Market Share of M&M Utility Vehicle = 42% (Market Leader)  Market Share of Tata Motors in UV = 21%  RMS of M&M Utility Vehicle = 2x
  19. 19. 10% 12% 14% 16% 18% 20% 8% 6% 4% 2% 0% 0.1 x 0.2 x 1x 0.5 x 0.4 x0.3 x 10x 4x 2x BusinessgrowthRate Relative Market share HIGH LOW LOWHIGH TRADITIONALBCGMATRIX
  20. 20. SBUSBU AMGRAMGR M&M mktM&M mkt Share (a)Share (a) LargestLargest CompetitCompetit or Mkt.or Mkt. share (b)share (b) X = a/bX = a/b TRACTORSTRACTORS 18%18% 29%29% 23%23% (TAFE)(TAFE) 1.261.26 TWOTWO WHEELERSWHEELERS 12%12% 1%1% 52%52% (HERO(HERO HONDA)HONDA) 0.020.02 UTILITYUTILITY VEHICLESVEHICLES 8.7%8.7% 42%42% 21%21% (TATA(TATA MOTORS)MOTORS) 2.002.00 Conclusion
  21. 21. 10% 12% 14% 16% 18% 20% 8% 6% 4% 2% 0% 0.1 x 0.2 x 1x 0.5 x 0.4 x0.3 x 10x 4x 2x BusinessgrowthRate Relative Market share HIG H LO W LO W HIG H TRADITIONALBCGMATRIX
  22. 22. Product Life Cycle  Product Life Cycle – shows the stages that products go through from development to withdrawal from the market  Product Portfolio – the range of products a company has in development or available for consumers at any one time  Managing product portfolio is important for cash flow
  23. 23. Product Life Cycles  Product Life Cycle (PLC): ◦ Each product may have a different life cycle ◦ PLC determines revenue earned ◦ Contributes to strategic marketing planning ◦ May help the firm to identify when a product needs support, redesign, reinvigorating, withdrawal, etc. ◦ May help in new product development planning ◦ May help in forecasting and managing cash flow
  24. 24. Product Life Cycles  The Stages of the Product Life Cycle: ◦ Development ◦ Introduction/Launch ◦ Growth ◦ Maturity ◦ Saturation ◦ Decline ◦ Withdrawal
  25. 25. Product Life Cycles  The Development Stage:  Initial Ideas – possibly large number  May come from any of the following – ◦ Market research – identifies gaps in the market ◦ Monitoring competitors ◦ Planned research and development (R&D) ◦ Luck or intuition – stumble across ideas? ◦ Creative thinking – inventions, hunches? ◦ Futures thinking – what will people be using/wanting/needing 5,10,20 years hence?
  26. 26. Product Life Cycles  Product Development: Stages ◦ New ideas/possible inventions ◦ Market analysis – is it wanted? Can it be produced at a profit? Who is it likely to be aimed at? ◦ Product Development and refinement ◦ Test Marketing – possibly local/regional ◦ Analysis of test marketing results and amendment of product/production process ◦ Preparations for launch – publicity, marketing campaign
  27. 27. Product Life Cycles  Growth: ◦ Increased consumer awareness ◦ Sales rise ◦ Revenues increase ◦ Costs - fixed costs/variable costs, profits may be made ◦ Monitor market – competitors reaction?
  28. 28. Product Life Cycles  Maturity: ◦ Sales reach peak ◦ Cost of supporting the product declines ◦ Ratio of revenue to cost high ◦ Sales growth likely to be low ◦ Market share may be high ◦ Competition likely to be greater ◦ Price elasticity of demand? ◦ Monitor market – changes/amendments/new strategies?
  29. 29. Product Life Cycles  Saturation:  New entrants likely to mean market is ‘flooded’  Necessity to develop new strategies becomes more pressing: ◦ Searching out new markets:  Linking to changing fashions  Seeking new or exploiting market segments  Linking to joint ventures – media/music, etc. ◦ Developing new uses ◦ Focus on adapting the product ◦ Re-packaging or format ◦ Improving the standard or quality ◦ Developing the product range
  30. 30. Product Life Cycles  Decline and Withdrawal: ◦ Product outlives/outgrows its usefulness/value ◦ Fashions change ◦ Technology changes ◦ Sales decline ◦ Cost of supporting starts to rise too far ◦ Decision to withdraw may be dependent on availability of new products and whether fashions/trends will come around again?
  31. 31. Product Life Cycles  SALES Development Introduction Growth Maturity Saturation Decline
  32. 32. Product Life Cycles  SALES Effects of Extension Strategies
  33. 33. Product Life Cycles  Sales/Profits Time PLC and Profits Losses Break Even Profits
  34. 34. The Product Life Cycle and the Boston Matrix  SALES Time A B C D The product portfolio – four products in the portfolio (1) (1) ‘A’ is at maturity stage – cash cow. Generates funds for the development of ‘D’ (2) (2) Cash from ‘B’ used to support ‘C’ through growth stage and to launch ‘D’. ‘A’ now possibly a dog? (3) (3) Cash from ‘C’ used to support growth of ‘D’ and possibly to finance extension strategy for ‘B’? Importance of maintaining a balance of products in the portfolio at different stages of the PLC – Boston Matrix helps with the analysis
  35. 35. APPROPRIATEAPPROPRIATE STRATEGIESSTRATEGIES TRACTORS (WEEK STAR) HOLD STRATEGY (Invest to protect)  Build capacity expansion  Increase investment  Increase advertisement and promotion  Increase market reach
  36. 36.  TWO WHEELERS (WEEK ?)  Exceptional case (Money hogger)  Product is in early stage  Try to build it and turn in to STAR  Invest intensively FINDINGSFINDINGS
  37. 37. • UTILITY VEHICLES (STRONG CASH COW) HOLD STRATEGY (INVEST TO PROTECT)  Increase advertisement and promotion  Increase market reach  Increase Investment SUGGESTIONSSUGGESTIONS

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