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Discussion board 3: BCG Matrix

Introduction
Marketing products requires applying different strategies to capture as many customers as possible. Products have different life cycles and it is the role of the marketing managers to develop the best marketing strategies to maintain a high market growth and market share for the products at different life product cycles. The BCG Matrix helps managers develop appropriate strategies for pricing, promoting and branding products of companies. In this paper I will discuss BCG Matrix as a tool used by managers to develop different marketing strategies for products in different product life cycles. Two products: appliance and electronics division of a certain company will be analyzed to develop the best strategies that the managers of the company should have to ensure maximum gains are obtained from the sale of these products.
The BCG Matrix
The BCG Matrix provides four classifications of different products in the market which have different market growth and market share. The vertical axis indicates the growth rate of products in the market while the horizontal axis shows the market share of products in the market. This matrix groups each product as a star, cash cow, dog or under the question marks category. The groups indicate the product life cycles of all products in the market and different strategies should be adapted to market products in each category (Griffin, 2006).
Products in the stars category have a high market share and generate large amounts of cash flows. New products in the markets life cycle appear in this column. As such, consumers are too willing to purchase the products and there is low saturation of substitute products in the market. Products in the ‘Cash Cows’ category have a low growth rate but generate a lot of cash for the organization. These products are market leaders and have a stable market position. The product life cycle of these products indicates that they are at maturity or are almost to become saturated in the market. Products in the ‘Question Marks’ class have a high market growth rate and low market share. These products have the likelihood of having dropped from a dominant position in the market. The products are in the growth stage of their life cycle and generate a lot of income despite the declining market share. The last group is composed of the ‘dog products’ which have a declining market share and market growth (Stone, 2001).
Source: QuickMBA (2010)
In our case, there are two divisions of the company, the appliance and electronics divisions. The electronics division is located in the ‘question marks’ quadrant of the BCG Matrix while the appliance division can be located in the ‘dogs’ quadrant of the BCG Matrix. The company should use these findings to come up with better marketing strategies. Products in different life cycle stages require the application of different marketing strategies. The findings obtained are very important to the marketing department as well as the managers in developing the best marketing strategies for the electronics and appliances divisions.
These findings suggest that: the electronics division is in the maturity phase of a product life cycle while the appliance division is in the decline position of the product life cycle. The management requires applying different branding systems, unique pricing strategies, different distribution channels and promotional strategies (Stark, 2005). As such, the sales growth rate for the electronics division is high but the market share is very low. This indicates that the management has the obligation of developing promotional, pricing and branding strategies which will attract new customers. The management should try introducing these products in new markets which have not been penetrated to create new demand for them. On the other hand, the marketing management can re-brand the products, use different promotional strategies or price the two products differently to induce new demand for them in the market.
 
Source: Stark (2005).
From the above figure, it is evident that products at the introduction and growth stages have an increasing market share. At maturity stage the market share of the products declines and assumes a plateau shape. Thereafter, sales volume declines as the product continues to exist in the market.
Recommendations

The marketing department should come up with a new pricing strategy, for example lower the current price to attract new customers or retain customers in a price-elastic market.
The two products should be re-branded to create a new taste in the market. This will attract new customers in the market and retain the existing ones.
Promotional strategies should focus on retaining the existing customers because the market is already at its maturity stage and no new customers or potential customers are available.

Conclusion
BCG Matrix is a tool used by marketing department and managers to develop the best strategies to position product in the market. The matrix provides categories of products in the market and their stages of development in their product life cycle. The management of the company being studied should adopt new marketing strategies for electronics division and the appliances division. This means that the price, promotion and brand names of the two products should be changed to match the market demand.
 

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