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Essay / BCG Matrix Case Study - 1003
The Boston Consulting Group (BCG) Matrix is used by organizations to analyze whether their performance is high or low, and indicate their market growth or position in the market, which is similar to the product life cycle, stages of introduction, growth, maturity and decline. Stars – represent strong market growth and high market share, and are leaders in the business world. The organization would need a substantial amount of money to maintain its high market share; they are also users and generators of cash. These are the main units of an organization and it shows where the company should invest its money, as stars are expected to become cash cows and generate positive cash flow. Question Marks – represents low market share and high market growth. At this point, the organization will invest heavily. Once the product is accepted, the organization will experience a high growth rate. For example, the PAX Yogurt Company, originally from Mont Saint-Benoît, is a local company that has developed seven different flavors of yogurt on the market: almond, guava, passion fruit, pineapple, soursop, strawberry, natural (plain) and vanilla. The main objective was to meet the needs of customers with a good quality product at an affordable price in order to generate high sales and profitability for the company. It is imperative at this stage that special attention is given to creating pricing, location or distribution and promotion strategies in order to establish a presence in the market and create appropriate demand for the product. Pricing strategies include price skimming and price penetration. It is advisable at this stage to use the price skimming strategy, for example by setting the price of the product as high as possible. Prices can then be lowered when demand begins to fall.