18 Questions
What are the four categories in the BCG matrix for classifying strategic business units?
- High-Growth High-Share Products (Stars) 2. Low-Growth High-Share Products (Cash Cows) 3. High-Growth Low-Share Products (Question Marks) 4. Low-Growth Low-Share Products (Dogs)
Which category in the BCG matrix represents products with high growth potential and high market share?
High-Growth High-Share Products (Stars)
What type of products are classified under 'Low-Growth High-Share Products' in the BCG matrix?
Products that bring higher profits but have a slow market growth rate.
What do 'High-Growth Low-Share Products' represent in the BCG matrix?
Products with high growth potential but low market share, categorized as Question Marks.
Which category in the BCG matrix includes products with low growth and low market share?
Low-Growth Low-Share Products (Dogs)
What is the purpose of the BCG matrix in analyzing strategic business units?
To classify products based on market growth rate and market share to guide resource allocation.
What are some characteristics of emerging markets?
More than half the world’s population, large share of world output, high growth rate
How is market size estimated using the trade analysis method?
Total production plus imports, minus total exports for the product category
When is the analogy method used to estimate market size?
In countries with inadequate information or lower levels of development
What does the analogy method aim to do?
Estimate market size using similarities in economic development and consumer behavior
Why might changes in stocks need to be considered in market size estimation?
To arrive at an effective market size
What does the high growth rate of emerging markets signify?
Enormous market potential
What are some factors that contribute to market attractiveness?
Market size, market growth, customers’ buying power, average trade margins, seasonality and fluctuations in the market, marketing barriers, competitive structures, government regulations, economic and political stability, infrastructure, and psychic distance
How is the competitive strength of a firm determined?
By its market share, familiarity and knowledge about the country, price, product fit to the market, demands, image, contribution margin, technology position, product quality, financial resources, access to distribution channels, and their quality
What do primary markets offer in terms of marketing opportunities?
The highest marketing opportunities and call for a high level of marketing commitment
What characterizes secondary markets?
Perceived political-economic risks are too high to make long-term irrevocable commitments
How should a firm approach tertiary markets?
A firm should allocate minimal resources as these markets have a high number of perceived risks
What kind of marketing strategies are often followed in tertiary markets?
Opportunistic marketing strategies such as licensing
Study Notes
Market Attractiveness
- Various factors contribute to market attractiveness, including market size, market growth, customers' buying power, and more.
- These factors help determine the potential of a market for a company.
Competitive Strength
- A firm's competitive strength is determined by its market share, familiarity, and knowledge about the country, price, product fit, and more.
- These factors help a company establish a strong presence in a market.
Market Classification
- Primary markets offer the highest marketing opportunities and require a high level of marketing commitment.
- Secondary markets have high perceived political-economic risks, and firms must adopt individualized strategies to overcome these risks.
- Tertiary markets have a high number of perceived risks, and firms allocate minimal resources to these markets.
International Market Analysis Tools
- The Boston Consulting Group (BCG) matrix is a tool for classifying strategic business units (SBUs) of an organization.
- The BCG matrix can be used to segment products into four categories:
Stars
- High-growth high-share products with high growth potential but requiring significant resources.
Cash Cows
- Low-growth high-share products with high profits but slow market growth rate.
Question Marks
- High-growth low-share products with high risk and uncertain future.
Dogs
- Low-growth low-share products with low market share and low growth rate.
Market Attractiveness/Company Strength Matrix
- This matrix analyzes the attractiveness of international markets and the competitive strength of a company.
Market Selection and Targeting
- Emerging markets have enormous market potential due to high growth rates and large populations.
- Trade analysis and analogy methods can be used to estimate market size for a country.
- Trade analysis involves estimating market size by analyzing a country's trade data.
- The analogy method involves comparing a country's market size to a similar country with known market size.
Learn about the Boston Consulting Group (BCG) matrix, a model used for classifying strategic business units of an organization. Developed approximately 30 years ago, this matrix helps in segmenting products into categories for analysis and strategic planning.
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