sm guide for other prgs

8/3/2019 Sm Guide for Other Prgs

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PLEASE NOTE THAT; This is just a guide and it does not take away thegood judgment of the examiner be it internal or external from giving extracredit but within the agreed range to any section of the question.

Section A

Part (a). (Introducton=1mark, Sketch of BCG=2marks, Analysis of product+mention of particular product under aquadrant+advise=4*4=16marks, conclusion=1mark) Total =20marks

Introduction (1 mark)BCG Model is an abbreviation for Boston Consulting Group which was theinvetor of the famous BCG model used in portfolio analysis. Portifolio analysisis a technique used to analyse organisations in relation to theirenvironments. A biz portfolio may be any collection of brands / products,markets, branches / divisions, income generating assets, e.t.c. PA is usually

applied to firms with multiple SBUs (more than one product/services,customer categories, markets , divisions). Since youth telecom has a numberof products like the voice, text, internet services, the BCG model can be usedto analyse their performance.

Main Body (up to 16 marks)The BCG analyses the business portfolio in relation to market share andmarket / industry growth ranging from low to high. A product is positioned inthe model and the firms strategy is guided by the SBUs positioning.The BCG(Boston Consulting Group) model

Stars Question marks

Cash cows Dogs

High LowRelative market share

Cash cows (4marks) Businesses with low growth but high market share Generate huge sums of money at low cost In the case of youthtel these should be the Voice since they have a

stable/loyal customer base yet are not growing that much as quated inthe case.Advise: Money from cashcows should be used to develop andpromote new products or promote other products like the mobilemoney (they are milked)

Note: (Those students who put Text as a cashcow must support it with theevidence that although customers are many(thus high market share), thecomplaints are many hence reducing usage (cause for low industry growth).

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Stars (4marks) Are products/Business with a high market share and high growth rate Generate huge sums of money but also Require huge sums of money

to cope with growth The Money transfer services qualify to be stars as they fulfill the above

qualitiesAdvise: Use the funds from (Voice)/cashcows to expand and grow thestar product (Money transfer services)Question marks (Fledglings) (4marks)

Sometimes called problem children (they need to be grown). They generate low cash but need a lot to tap the high growth rate. Youthtels internet services lie under this quadrant since they poses

the above qualities.Advise: They can be grown into stars by investing moreresources/funds generated from the voice product in them althoughmanagement should be ware that too much commitment to question

marks can lead to liquidity problems.Dogs (4marks)

Have low market share in an aged industry (Some students may argue that the Text Product is a Dog because

they are not growing due to many complaints from existing customerswhich scares away potential customers yet the less usage by existingcustomers accounts for low market share). Others may argue that noproduct was in this quadrant

The advise here according to the BCG, is simply to divest the productin case it exists. The strategy is, normally to sell them off. Howeverother strategies would include retrenchment, rebranding e.t.c.

Conclusion (1 mark)The BCG model however simple it is, it has limitations like it considers onlyextreme conditions of high and low without regard to the fact that someproducts could have moderate performance. Such weaknesses areaddressed by other models like the GE model and the life-cycle matrix.

Section A Part (b)2 | P a g e


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Market penetration seeks to achieve four main objectives: Maintain or increase the market share of current products this can beachieved by a combination of competitive pricing strategies, advertising,sales promotion and perhaps more resources dedicated to personal selling Secure dominance of growth markets

Restructure a mature market by driving out competitors; this would requirea much more aggressive promotional campaign, supported by a pricingstrategy designed to make the market unattractive for competitors Increase usage by existing customers for example by introducing loyaltyschemesA market penetration marketing strategy is very much about business asusual. The business is focusing on markets and products it knows well. It islikely to have good information on competitors and on customer needs. It isunlikely, therefore, that this strategy will require much investment in newmarket research.Market development (could be in the case of the money transfer

services)Market development is the name given to a growth strategy where thebusiness seeks to sell its existing products into new markets.There are many possible ways of approaching this strategy, including: New geographical markets; for example exporting the product to a newcountry New product dimensions or packaging: for example New distribution channels Different pricing policies to attract different customers or create newmarket segmentsProduct development (could be used for the internet services)

Product development is the name given to a growth strategy where abusiness aims to introduce new products into existing markets. This strategymay require the development of new competencies and requires thebusiness to develop modified products which can appeal to existing markets.DiversificationDiversification is the name given to the growth strategy where a businessmarkets new products in new markets.This is an inherently more risk strategy because the business is moving intomarkets in which it has little or no experience.For a business to adopt a diversification strategy, therefore, it must have aclear idea about what it expects to gain from the strategy and an honest

assessment of the risks.

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