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.
