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Chap. 11 plc portfolio planning

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Chap. 11 plc portfolio planning

  1. 1. Chapter 11 Jobber Managing products: product life cycle, portfolio planning and product growth strategies
  2. 2. Product Life Cycle
  3. 3. Alternative PLC Patterns
  4. 4. Cadbury’s Caramel Cadbury’s Caramel has been marketed for many years, but still receives advertising support to stimulate sales in a mature market.
  5. 5. Product Life Cycle Uses. • Product termination. • Growth projections. • Marketing objectives and strategies over the PLC. • Product planning. • The dangers of overpowering.
  6. 6. Nokia The Nokia 5310 XpressMusic includes a music player and FM radio.
  7. 7. Marketing objectives and strategies over the product life cycle
  8. 8. Product Life Cycle Limitations. • Fads and classics. • Marketing effects. • Unpredictability. • Misleading objective and strategy prescriptions.
  9. 9. Portfolio planning Definition. The process of managing products as groups (portfolios) rather than separate, distinct and independent entities.
  10. 10. Boston matrix
  11. 11. The Boston Consulting Group Growth-Share Matrix Stars Problem children Cash cows Dogs 7% 15% 0% Market Growth Rate Market Share10 0
  12. 12. Strategic objectives and the Boston Box  Build sales and/or market share  Invest to maintain/increase leadership position  Repel competitive challenges Stars Build selectively Focus on defendable niche where dominance can be achieved Harvest or divest the rest Problem children Harvest or Divest or Focus on defendable niche Dogs Hold sales and/or market share Defend position Use excess cash to support stars, selected problem children and new product development Cash cows
  13. 13. Strategic objectives and the Boston Box  Build selectively  Focus on defendable niche where dominance can be achieved  Harvest or divest the rest Problem children Harvest or Divest or Focus on defendable niche Dogs Build sales and/or market share Invest to maintain/increase leadership position Repel competitive challenges Stars Hold sales and/or market share Defend position Use excess cash to support stars, selected problem children and new product development Cash cows
  14. 14. Strategic objectives and the Boston Box  Hold sales and/or market share  Defend position  Use excess cash to support stars, selected problem children and new product development Cash cows Build selectively Focus on defendable niche where dominance can be achieved Harvest or divest the rest Problem children Harvest or Divest or Focus on defendable niche Dogs Build sales and/or market share Invest to maintain/increase leadership position Repel competitive challenges Stars
  15. 15. Strategic objectives and the Boston Box Build sales and/or market share Invest to maintain/increase leadership position Repel competitive challenges Stars Build selectively Focus on defendable niche where dominance can be achieved Harvest or divest the rest Problem children  Harvest or  Divest or  Focus on defendable niche DogsHold sales and/or market share Defend position Use excess cash to support stars, selected problem children and new product development Cash cows
  16. 16. The case of an unbalanced portfolio High Low LowHigh Marketgrowthrate Market share
  17. 17. Boston example
  18. 18. Boston example
  19. 19. Criticisms of the Boston Box • Cash flow predictions. • Market share and market growth focus. • Use of proxies. • Market share preoccupation. • Interdependencies. • Building stars.
  20. 20. Criticisms of the Boston Box • Competitor reactions. • Self-funding assumption. • ‘Market’ definition vagueness. • Use of cash flow rather than profitability for resource allocation. • Lack of precision.
  21. 21. The General Electric Market Attractiveness– Competitive Position Model High Low LowHigh Competitive strength Medium Medium 1 2 5 4 3 Marketattractiveness
  22. 22. Market attractiveness • Market size • Market growth rate • Beatable rivals • Market entry barriers • Social, political and legal factors
  23. 23. Competitive strength • Market share • Reputation • Distribution capability • Market knowledge • Service quality • Innovation capability • Cost advantages
  24. 24. Criticisms of the GE Portfolio Model • Difficulty of use. • Managerial bias.
  25. 25. Implications of portfolio planning Different products Different roles Different reward systems Different types of managers

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