Boston Matrix
Transcript: Bevwire., 2011. Red Bull to discontinue energy shots and cola. [online] [viewed 10th January 2014] Available at:http://bevwire.wordpress.com/2011/07/25/red-bull-to-discontinue-cola-and-energy-shots/ Caffeine Informer., 2014. Top 15 Energy Drinks Brands. [online] [viewed 7th February 2014]. Available at: http://www.caffeineinformer.com/the-15-top-energy-drink-brands Cooper, L & Nakanishi, M., 1988. Market share analysis: Evaluating competitive marketing effectiveness. New York: Springer Publishers Crowe, A., 2010. Business Objective. [online] [viewed 7th January 2014]. Available at:http://www.slideshare.net/Alistercrowe/business-objective J, XU., 2005. Market Research Handbook: Measurement approach and practise. Indiana: IUniverse Publishers Narole, M. 2013. Business strategy and strategic management: BCG matrix. [online] [viewed 13th February 2014]. Available at: http://www.slideshare.net/9579764806/bcg-matrix-with-example Red Bull,. 2014. Red Bull our story. [online] [viewed 16th February 2014]. Available at: www.redbull.co.uk • Most business' start off as question marks • They will absorb great amounts of cash if the market share remains unchanged (low) • Question marks have all the potential to become either star, cash cow, or dog • Investment should be high for question marks RMS= Business unit sales this year/leading rivals sales this year. Relative market share is the share of the market commanded by a firm’s product or brand. Market Growth Rate. The potential to expand production across Asia is a huge opportunities for Red Bull; the expansion would be purely marketing based. This would turn the red bull energy drink back into a star allowing them to experience high growth rates. Tomorrow step's: - Asia (future) - Brazil (Today) - World Cup (Today) - Olympics (Today) - Future X games Massive opportunity for the company. Why Asia is Red Bulls next target market: -India boasts the highest number of 20-24 year olds at 98million - China is at 82million - Indonesia at 21million - A total potential market of 201million in just these 3 parts of Asia Fitting Red Bulls target market perfectly, it would be a huge threat if a competitor were to establish themselves in the Asian market before Red Bull. Developed by Bruce Henderson of the Boston Consulting group in the 1970’s. According to this technique, business or products are classified as low or high performance. This depends on their market growth rate and relative market share. To understand Boston Matrix you need to understand how market share and market growth are interrelated... Dog (Low Growth, Low Market share) Pros & Cons Boston Matrix Relative Market Share. • Stars are leaders in business • They require heavy investment to maintain their large market share • They lead to large amounts of cash consumption and cash generation • Attempts should be made to hold the market share otherwise the star will became a cash cow Cash cow (Low growth, High market share) STAR (High growth, high market share) k Boston Matrix allows Red Bull to profile their products and Identify where each product is in its product life style. Benefits of Red Bull using Boston Matrix. It also allows Red Bull to Identify the cash demands of the product and in turn, through other models such as Ansoff, consider how to grow the business through their existing products; or by the addition of new ones which would become Question Marks. Limitations of Red Bull using Boston Matrix. The Boston Matrix is a Portfolio planning model based on the observation that a companies business unit can be classified into 4 categories -Question Marks (Problem Child) -Stars -Cash Cows -Dogs Boston Matrix The Boston Matrix • Dogs are the cash traps • Dogs do not have potential to bring • High cost – low quality • Business is situated at a declining stage Mission Statement: “To spread our wings over the world” The Boston Matrix is Based on the combination of growth and Market share relative to its competitors Red Bull Problem child / Question mark (High Growth, Low Market share) Only uses two dimensions- relative market share and relative market growth rate. There can be problems gathering data on other companies market share and market growth. High market share does not necessarily mean profit all of the time Business' with low market share can be profitable too. MGR= Individual sales shown in yearly graphs or charts; This years individual sales/ Last years individual sales and so on. Market growth rate is a key indication of the products stage in its product life cycle. Future provision for Red Bull History: Inspired by functional drinks from the Far East, Dietrich Mateschitz founded Red Bull in the mid 1980's. In 1987, on April 1, Red Bull Energy Drink was sold for the very first time in its home market Austria. This was not only the launch of a completely new product; it was, in fact, the birth of a totally new product category. About the can: Today Red Bull is available in more than 165 countries 35