Chapter 1 Flashcards
BCG Growth Model stands for what?
Boston Consulting Groups
What are the names of each section in the BCG growth model and where are they on the chart?
Star:
- High Market growth,
- High Relative Market share
Cash Cows:
- Low Market growth,
- High Relative Market share
Question Mark:
- High Market growth,
- Low Relative Market share
Dogs:
- Low Market growth,
- Low -Relative Market share
What are the Stars in the BCG Growth Model?
- The company’s shining businesses
- dominant players in fast growing markets
- Often funded by cash cows
- Eventually become cash cows when growth slows
What are the Cash Cows in the BCG growth model
- Dominate slow growth markets
- make more cash than they need
- often lend thier extra money to fast growing businesses
What are the question marks in the BCG model?
Pose investment dilemmas for the company
- company needs to determine whether they will invest in it or drop it.
- Cash cows are often needed to moves these companies forward
- can have the potential to become stars
What are the Dogs in the BCG model?
- have hardly any to no hope of becoming stars or cash cows
- provide enough cash for thier own business
- company’s will often drop them in order to invest more in more promising businesses
What is the path to profitability?
- Group customers into groups through segmentation
- company selects groups to target
- the company positions its product offering for the target customers.
- make decisions based on marketing mix (four P’s)
- Then use profitability drivers (customer acquisition, customer retention, sales per customer, and margin)
What are the four profitability drivers
- Customer acquisition
- customer retention
- sales per customer
- margin
What is customer acquisition?
- Find new ways to get customers
- get less sales customers and more investment customers
- get higher value customers
- Eliminate unprofitable customer acquisition activities
What is Sales per customer?
- Increase number of customers who buy from both you and your competitor
- Make more add-on-sales (McDonald’s combo meal)
- Partner with other firms to make add on sales
What is customer retention
- Eliminate the reasons customers leave
- actively recover customers that have just left or are about to leave
- Develop loyalty programs for top customers
- acquire customers that are more likely to be loyal
Wat is margin?
- Increase price
- Look for the money–A product that demands a price far exceeding its cost
- shift mix of purchases toward higher margin products
- change customer behaviors so they are less expensive to serve
- terminate unprofitable customers
What are brand champions?
- Know why real people/customers love you
- Advertise reasons why customers love your product
Market penetration
selling more of the existing products in existing markets.
Product development
introducing new products to existing markets.
Market development
introducing existing products to new markets.
Diversification
introducing new products to new markets
Customer lifetime value
- What the customer’s economic value and worth is to your business over their “lifetime” with the business.
- need to know this so that you know how much to invest in each customer
Marketing Value
Priority is to create value for the customers and provide for thier wants and needs
Value=Benefits – costs
Strategic triangle
Company=>Value=>customer
Competition=>(Value=benefits-costs) =>Customer
Company <= Cost => Competition
Target Market
Group of people you are trying to sell your product to.
Marketing Mix
Production, Promotion, Price, Place
Marketing Strategy
o How do we orchestrate the marketing mix to deliver value to a particular market segment
o Addresses a specific target market with a cohesive marketing mix of product price promotion and place
Name four marketing philosophies
Product orientation
sales orientation
market orientation
societal orientation
Product orientation
- all about the product
- does not consider competitors or the needs of the market
Sales orientation
aggressive sales techniques
Market orientation
Understand customer needs, company capabilities, knows competitors, and wants to make a profit
Societal orientation
Concerned about societies current trends (e.g. Concerned about the environment)
