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BCG MATRIX & CUSTOMER RELATIONSHIP MANAGEMENT

BY: Samuel Poku-Bonsu


UNIVERSITY OF APPLIED MANAGEMENT

Business context
(Product re-launch, product development)

Advantages & Disadvantages Definition of BCG terms Creation of stars Maintaining their cash cows popularity Strategies for dealing with dogs

Simple to use Portfolio analysis


When you know what you have you will know what to do

Customer profitability analysis - Pareltos principle Decision making tool Strategy formulation

2-Dimensional analysis is not exhaustive of all perspectives for analysis may mislead!
High market share not always suggestive of profitability (& vice versa) Rate of market growth not the only predictor of market attractiveness (e.g. GLOBACOM ignored customer loyalty and level of competition in Ghanas Telecom industry). Other factors - price elasticity Misconception for dog products divest/ liquidate. Dogs can be kept strategically to ward off competition.

Limited access to data on competitors market share may limit effective use Lack of temporal qualities does not capture growth of products over time; rather gives a snapshot of present situation. Ignores profit potential of declining markets. Over-simplification of classification. Products may have boarder line status leading to subjectivity in classification

Maintain existing stars (Defense strategy eg Market penetration) Introduction of new stars (product launch after R& D investment ff. by effective market research) Converting other existing products (question marks and dogs) into stars Divestiture of dogs to focus resources on other products Re-investing excess cash generated from cash cows Effective strategic planning, implementation, monitoring & control. Segmentation & Targeting

PRODUCT Market penetration Re-branding (e.g. VOLTIC repackaging) PRICE Competitive pricing policy (benchmark market leader/ greatest threat) Aggressive discounting (Take advntg. of economies of scale) Discriminatory pricing PLACE Increase distribution channel Improve supply chain (prudent supply chain management)

DIVEST/ LIQUIDATE Cut your losses Sell product rights Focus attention and resources on: Products or segments that will generate higher ROI Products that can be revived (question marks, *other dogs) KEEP & Reduce cost of maintenance Strategic for reducing threat of new market entrants Provide a credible presence in the market (fair competition) Creating portfolio balance

What are CRM systems?

INTEGRATION OF HETEROGENEOUS COMPONENTS

SELECTION OF CRM BASED PRODUCTs & SERVICES

COMMUNICATION

OF CRM INITIATIVE TO EMPLOYEES

CAPACITY BUILDING TRAINING EMPLOYEES

CHANGE
MANAGEMENT

The principal benefits of adopting CRM systems are to: Improves the organizations ability to retain and acquire customers Maximizes the lifetime value of each customer (share of wallet) Improves service without increasing cost of service. [CMG, 2000] OTHER POSITIVE IMPLICATIONS Single view of customer data Immediate, real-time information available Knowing and understanding your customer(s) Knowledge preservation and retention Automation of time consuming tasks Reduction in number of lost leads Standardized best business practices enforced

NEGATIVE IMPLICATIONS (Risks) Cost, Time and ROI implications


The cost of implementing a CRM system is easily double the Enterprise Resource Planning (ERP) implementation cost. [Morrison, 1999] Average implementation time for an ERP system is 23 months and the cost of ownership over the first 2 years is from 0.4% to 1.1% of company revenue. [Higgins, 1999]

Web dependency can lead to loss of revenue Over automating may lead to alienation of customers (rather than bringing the company closer to its customers)

Source: A.R. Zablah et al/ Industrial Marketing Management 33 (2004) 475 489

Anderson, Kristin, and Carol Kerr. Customer Relationship Management. New York: McGraw-Hill, 2002. Bain & Company, Inc, Management Tools and Trends 2005. Jain, D., & Singh, S. S. (2002). Customer lifetime value research in marketing: A review and future directions. Journal of Interactive Marketing, 16(2), 34 46 http://www.scribd.com/doc/44205199/Bcg-Matrix-of-Amul-India [Retrieved: 21/08/12] http://www.slideshare.net/wadekar/bcg-matrix [Retrieved: 21/08/12] http://lamarheller.com/technology/crm/whitepapers/crmdataperspective. pdf [Retrieved: 21/08/12]