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).

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.  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.  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.

5. 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

6. 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

7. The Boston Matrix
 Cash Cows:
◦ High market share
◦ Low growth markets –
maturity stage of PLC
◦ Low cost support
◦ High cash revenue –
positive cash flows

8.  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?

9.  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?

10.  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.

11. 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.

12.  Automobiles
 Farm equipment
 Trade & finance
 Infrastructure
 IT
 Other specialty business

13.  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)

14.  Tractors
 Two Wheelers
 Utility Vehicles

15.  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

16. 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

17.  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

18. 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

19.  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

20. 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

21. 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

22. 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

23. 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

24. 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

25. Product Life Cycles
 The Stages of the Product Life Cycle:
◦ Development
◦ Introduction/Launch
◦ Growth
◦ Maturity
◦ Saturation
◦ Decline
◦ Withdrawal

26. 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?

27. 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

28. Product Life Cycles
 Growth:
◦ Increased consumer awareness
◦ Sales rise
◦ Revenues increase
◦ Costs - fixed costs/variable costs, profits may be made
◦ Monitor market – competitors reaction?

29. 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?

30. 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

31. 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?

32. Product Life Cycles
 SALES
Development Introduction Growth Maturity Saturation Decline

33. Product Life Cycles
 SALES
Effects of Extension
Strategies

34. Product Life Cycles
 Sales/Profits
Time
PLC and Profits
Losses
Break Even
Profits

35. 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

36. APPROPRIATEAPPROPRIATE
STRATEGIESSTRATEGIES
TRACTORS (WEEK STAR)
HOLD STRATEGY (Invest to protect)
 Build capacity expansion
 Increase investment
 Increase advertisement and promotion
 Increase market reach

37.  TWO WHEELERS (WEEK ?)
 Exceptional case (Money hogger)
 Product is in early stage
 Try to build it and turn in to STAR
 Invest intensively
FINDINGSFINDINGS

38. • UTILITY VEHICLES (STRONG CASH COW)
HOLD STRATEGY (INVEST TO PROTECT)
 Increase advertisement and promotion
 Increase market reach
 Increase Investment
SUGGESTIONSSUGGESTIONS