Business and Its Environment
The Boston Consulting Group Matrix
What is marketing?
• Philip Kotler et al. defined marketing
as: a social and managerial process
by which individuals and groups
obtain what they need and want
through creating and exchanging
products and value with others.
• The basic concepts are human needs,
wants and demands.
• People satisfy their needs and wants
with products and services.
• Consumers make buying choices
based on their perceptions of the
value that various products and
• Marketing occurs when people decide
to satisfy needs and wants through
• A Chery QQ means basic
transportation, low price and fuel
economy. A Mercedes-Benz means
comfort, luxury and status.
• Moreover, consumers will compare
the value of owning a Mercedes
against the value of owning other
comparable manufacturers’ models –
Lexus, Audi, BMW – and select the
one that gives them the greatest
• In 1953 Neil Borden尼尔·博登 developed
the idea of a marketing mix to describe
the marketing elements that could affect
the way a product performed in the
• In 1963 Jerome McCarthy杰罗姆·麦卡锡
summarized the marketing mix, or
product, price, place, promotion, as the
four Ps of marketing.
• In 1967 Philip Kotler further confirmed the
4Ps as the core of the marketing mix.
Figure 3.1 The marketing mix
• Today the marketing mix or 4Ps is
one of the traditional tools used to
manipulate the organization’s
relationship with the external
• That is to say, there are four basic
ways in which organizations can
affect the relationship they have with
their customers to increase sales
• The 4Ps can be manipulated, altered
or improved as a product declines.
• The manufacturer will want to make as
much of the product for as long as possible
with little new investment or alteration in
order to keep sales high and reap profits.
• In order to keep sales of the existing
product buoyant, it is possible to
manipulate certain aspects of that product
at little cost in order to offer a newer,
fresher and updated product.
• The clear aim is to continue to attract new
customers and/or tempt existing customers
to remain loyal and not be attracted by a
• Product aspects that can be
manipulated include style,
performance, quality, branding,
packaging and after-sales service.
• Examples of such product
manipulation abound in the washing
powder industry. Famous and
familiar brands are often relaunched
as ‘new’, ‘improved’ or as version
two or three.
• The basic product is still washing
powder, with additional features.
• Manipulation of the product:
allows the manufacturer to claim
continual innovation, improvement
and customer orientation.
requires co-operation between the
marketing and operations
Style: LG–- the “chocolate” series
KG90n is almost the same with KG90
except the golden adornment. This
makes the “chocolate” keep high sales.
Performance: The Microsoft
Windows XP Windows 7
The Microsoft company releases the new
Windows 7 operating system. Windows 7 has
more functions than windows XP. Now more
and more users are choosing Windows 7 to
Packaging: DOVE’ s chocolate
The better packaging of the chocolate, the
higher price will be charged. Organizations
always use this measure to increase the
After-sales service: The computer game--
-- The Sims series.
After the computer game (not the network
games) was sold, customers can download
many new resources free which are provided
by the manufacturer. The new downloaded
resources keep the game fresher.
• There are various ways in which
organizations can use the price they
charge to influence sales.
• The music industry has used pricing
strategies aggressively to influence the
positioning of new releases in the pop
• Most singles on release are now sold at a
discount price in the first few weeks to
entice customers to purchase them.
• The national music charts are compiled
out of sales figures at monitored outlets,
and these subsidised sales cause new
releases to have a high entry position in
the pop charts in the first week, which
encourages more radio play.
• This produces continued sales as radio
listeners go out to buy the music they
• Special offers and finance deals
can be used to affect customers’
• Price manipulation depends on
co-operation between the
marketing and finance
In order to increase sales, some products of
Watsons have been discounted even 50% to
attract more customers.
Watsons is a successful retailer that has a
Private Brand(PB). So he has more freedom
and flexibility in pricing.
• Decisions have to be made concerning the
advertising media to be used: Press,
Magazines, TV, Radio, Internet.
• A combination of advertising and
promotional activities is required to create
and support a successful product.
• To create an awareness and interest in the
product and to ensure acceptance by the
• In supermarkets with loyalty cards,
the offer of extra bonus points on
certain products or goods entices
customers to switch loyalty from one
brand to another or to buy products
not normally on their shopping list.
• The launch of new products can be
heralded by the delivery to target
households of free samples, discount
vouchers or promotional literature.
• The sponsorship of television
programmes is a relatively new activity
in the UK following deregulation of
broadcast advertising, and is an effective
• Cadbury, ‘the nation’s favorite chocolate
manufacturer, sponsors Coronation
Street, one of the leading soap operas,
and the holiday company Going Places
sponsored Blind Date, where winning
contestants are sent off on holiday dates
around the world.
• Neither of these television programs
explicitly advertises the companies’
products, but implicitly links their
products with the program in the
• Promotion and advertising
support a product by:
- attracting new customers
- reminding consumers making
repeat purchases to buy the
same brand of product as before
(crucial if customer loyalty low)
Do you love me?
A diamond is forever.
Customers could have a 100% opportunity
to get a surprise which was provided by
Pantene. Organizations always use gifts to
encourage customers to buy the products.
• Manipulation of place is to
ensure the right amount of
the product is in the right
place at the right time
• Applies to all stages of the
• Manufacturer to wholesaler
• Wholesaler to retailer
• Retailer to customer
• Manufacturer to consumer
• Business-to-consumer (B2C)
• Careful positioning of goods
in shops is to improve sales
• e.g. sweets by the
• e.g. perfume next to the main
doors in department stores
• e.g. petrol station links one-
• Dennis is a famous store in Zhengzhou.
The store is always keeping the high
sales and attracting a lot of customers
• The placement of goods is very
appropriate such as placing the makeup
on the first floor. When the customers
come into the store, they can see the
luxuries at the first sight. This increases
the opportunities to be sold.
The extended marketing mix: the
fifth ‘P’ of marketing
• ‘People’ includes:
- staff inside the organisation
- customers and consumers outside the
• ‘Manipulation’ of people covers:
- effective use and management of staff
- sales staff building good relationships
Product life cycle
• A Harry Potter and the
Philosopher’s Stone tee-shirt
has a life cycle measurable in
months or until the next big
film hits the cinema screens
and its associated merchandise
arrives at the shops.
• In contrast, a product like a
television set has a product life
cycle of many years, due to
continued product development in
the field of television and
• Black-and-white, Colour, Liquid
crystal display (LCD), Light
emitting diode (LED).
Figure: The product lifecycle
• High costs, low sales - and
no profit is made
• Aim to recover research and
• Successful new product will
move to growth phase
• Steady costs, sales increase
rapidly and high profits can
be made by pioneering firms
• Aim to attract first-time
customers and build market
• Steady costs, sales increase
more slowly and profits peak
• The outlay is minimal compared
with that in the growth stage
• Aim to keep existing customers
and persuade other consumers
to switch from competing brands
• Steady costs, sales peak (no more
growth) and reasonable profits
• Sales volume may be kept buoyant
and loyal customers retained by
price competition and special offers,
although this will mean reduced
• These are competitive options that
are easy for rivals to replicate
• Low costs, falling sales and
falling profits - maybe loss
• Withdraw loss-making product
• Keep decline product if it may
find a small, loyal, niche market
that either breaks even or makes
a limited profit
The Boston Consulting Group (BCG) matrix 波士顿咨询矩阵
• High growth markets
• Low market share
• Another product is current market
• Unlikely to be profitable
• High investment is required if a
question mark is to become a
• Successful question marks
• Stars are market leaders in
• require investment to maintain
market leadership in a high
• are marginally profitable
• are mature products
• occupy slower growth markets
• need less investment
• are the most profitable products
in a portfolio
• are used to fund products in
• Occupy no growth markets
• Have low market share
• Maybe previous cash cows
• Maybe marginally profitable
• Should be withdrawn before they
become loss making
A successful product
• A successful product moves
around the BCG matrix
• A question mark to … a star
• … a cash cow to … a dog or
back to a question mark
A less successful product
• A less successful product
remains in right-hand side of
the BCG matrix, and is
therefore a low cash
• A question mark may move to
… a dog
BCG matrix and
product lifecycle links
Q marks -------
• Cash cow -----maturity and
• Dogs ---------- decline
Balanced BCG matrix
• Tomorrow's products:
- question marks and stars
• Today's products:
- cash cows
• Yesterday’s products
• Check your understanding by naming
and illustrating the components of the
marketing mix. Use examples where
• Check your understanding by
summarising the key attributes of
product in different stages of the
product life cycle. Use examples where
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