bcg matrix

Report on

BCG Matrix analysis of Unilever Products

Submitted to:

Barota Chakraborty

Lecturer

Department of Marketing

Jahangirnagar University

Submitted by:

RUNNERS

Department of Marketing

Jahangirnagar University

Date of Submission: 16August, 2011

We Are…..

The Group of Runners

Letter of Transmittal

16th August, 2011

Barota Chakraborty

Lecturer

Department of MarketingJahangirnagar University

Serial No. Name ID

1. Borun Kumar Saha 658

2. Ashik Abdullah 678

3. S. Mohammadur Rahman 681

4. Sabakun Naher Shetu 642

5. Nushrat Shahab Bristi 644

6. MD. Nazmul Islam 663

Subject: Submitting the report on “BCG Matrix analysis of Unilever Products”.

Dear Madam,

We are submitting a well-structured and comprehensive analyzing report on “BCG Matrix analysis of Unilever Products” in due time. Despite many constraints like scope and access to information, we have tried to create something satisfactory.

We have tried to follow your guideline in every aspects of preparing this report. We have concentrated on the most relevant and logical areas to make our report coherent as well as practical.We hope this report will entice your kind appreciation.

Sincerely,

Borun Kumar Saha

(On behalf of the group members)

Runners

Department of MarketingJahangirnagar University.

Acknowledgement

At the very beginning, we would like to convey our sincere appreciation to the almighty god for giving us the strength, ability and confidence the tasked within the planned time.

We are indebted to our course instructor Barota Chakraborty, lecturer, Department of Marketing, Jahangirnagar University for her meticulous support and direction. Her suggestions and encouragement helped us in preparing this report.

Our fellow classmates supported us in every possible way. We would like to thank them for all their support.

Table of contents

Serial No.

Title Page No.

Executive Summary 6

1.0 Introduction 7-9

2.0 Limitations 10

3.0 Report Body(Discussion) 11-12

4.0 Conclusion 13

5.0 Reference 14

Executive Summary

On this report we have tried to find out the categories of product of Unilever & implement these products on BCG Matrix. Among the various products of Unilever we have chosen four products named:

1. Pure it

2. Lux

3. Colgate Toothpaste

4. Wheel washing bar soap

We try to put these products on BCG Matrix based on their market growth rate and relative market share. As we know to put a product on BCG matrix, we have to know the products market growth rate and relative market share. We have tried our best to analysis these products based on BCG Matrix.

INTRODUCTION

BCG Matrix has been introduced by Boston consulting group. It is a tool for analyzing market business portfolio based on market growth rate and relative market share. In this method SBU (strategic business units) are categorized into four several sections as: question marks, stars, cash cow, dog. It is based on product life cycle.

1. Stars (=high growth, high market share)

- use large amounts of cash and are leaders in the business so they should also generate large amounts of cash.-frequently, roughly imbalances on net cash flow. However, if needed any attempt should be made to hold share, because the rewards will be a cash cow if market share is kept.

2. Cash Cows (=low growth, high market share)- profits and cash generation should be high , and because of the low growth, investments needed should be low. Keep profits high.

- foundation of a company

3. Dogs (=low growth, low market share)- avoid and minimize the number of dogs in a company.

- beware of expensive ‘turn around plans’.- deliver cash, otherwise liquidate

4. Question Marks (= high growth, low market share)- have the worst cash characteristics of all, because high demands and low returns due to low market share- if nothing is done to change the market share, question marks will simply absorb great amounts of cash and later, as the growth stops, a dog.- either invest heavily or sell off or invest nothing and generate whatever cash it can. Increase market share or deliver cash

The BCG Matrix method can help understand a frequently made strategy mistake: having a one-size-fits-all-approach to strategy, such as a generic growth target (9 percent per year) or a generic return on capital of say 9.5% for an entire corporation.

In such a scenario:

A. Cash Cows Business Units will beat their profit target easily; their management has an easy job and is often praised anyhow. Even worse, they are often allowed to reinvest substantial cash amounts in their businesses which are mature and not growing anymore.

B. Dogs Business Units fight an impossible battle and, even worse, investments are made now and then in hopeless attempts to 'turn the business around'.

C. As a result (all) Question Marks and Stars Business Units get mediocre size investment funds. In this way they are unable to ever become cash cows. These inadequate invested sums of money are a waste of money. Either these SBUs should receive enough investment funds to enable them to achieve a real market dominance and become a cash cow (or star), or otherwise companies are advised to disinvest and try to get whatever possible cash out of the question marks that were not selected.

To prepare our assignment we have chosen Unilever Ltd. because it is one of the global fast moving consumer goods companies. Among the Unilever products we have chosen: Pure it, Lux, Colgate Toothpaste, and Wheel washing bar soap.

Limitations

Some limitations of the Boston Consulting Group Matrix include:

High market share is not the only success factor.

Market growth is not the only indicator for attractiveness of a market.

Sometimes Dogs can earn even more cash as Cash Cows.

A business with a low share can be profitable too.

Discussion:

Unilever currently maintain a price estimate at 37.89 dollar, roughly 23% ahead of the company’s market value.

To observe the Unilever growth share matrix we select four kinds of products, by which we can know the market position of this company. Market growth axis, correlates with the product life cycle and predicts the cash requirement a product needs relative to the growth of that market.

BCG Matrix analysis of our assign products:

Question Mark:

Among the products that we choose for analysing the BCG matrix Pure it is one of them. We thing it is under the question mark. Because it is the latest product of Unilever, launch recently. Pure it is an example of diversification, as we know Unilever is a company of toiletries and food. Pure it is going well in the market of water purifier. But it is not affordable to the mass people. Because Pure it costs 3300/= taka when the others cost 1000-1500/= taka. As a result the relative market share is not high enough as well as the growth rate. It has just brought 15% relative market share. As it is a new and good product it has the possibility to increase its relative market share and market growth rate in future. So we can say that it is under the Question mark categories.

Star:

Another product that we have chosen for analysing the BCG matrix LUX is one of them. We thing it is under the STAR categories. LUX is the most renowned product of Unilever and most people prefer to use it. It has been running since1916 and modified different times but its growth rate and relative market share haven’t fallen so much and recently the soap industry has seen to have a market growth rate of about 10%. This shows that industry has a high growth rate. Unilever is a market leader in the industry and its soap Lux enjoys a market share of 17% in India. So according to the concept of BCG matrix any product which has high market growth and market share is classified as STAR. The major objective of

products coming in Star is to maintain their high market share. Unilever comes up with various variants in LUX quite frequently in order to maintain their position.

Cash Cow:

Colgate Toothpaste is another product that we have taken. We think it is under the Cash Cow categories. Colgate is also a renowned and high selling product so its market share is so high (up to 51%). But its growth rate is 11% which is comparatively too low than the market share. And as the BCG matrix says which product market share is high but is market growth rate is low the product falls into cash cow categories.

Dog:

Our next and final product that we have taken for BCG matrix analysis is Wheel Bar Soap. We know Wheel is a renowned brand. But the usage of this brand’s products is declining day by day. And to survive from this situation Unilever has taken a decision to remove this brand and launched a new product called Rin detergent instead of Wheel detergent. And Unilever has mentioned Wheel under the Dog categories in their web page. As a result the product market growth rate and relative market share of Wheel is decreasing. That’s why we put Wheel bar soap in the DOG categories of the BCG Matrix.

Conclusion:

Through the whole survey and research, it is very clear that the products that we have chosen among the Unilever products are fall into the four categories of BCG Matrix. And we think that the four products are fit the BCG matrix correctly and we put them according to their market growth rate and relative market share.

Reference

hppt://www.Google.com

hppt://www.capitaline.com

hppt://www.unilever.bd

hppt://www.scribe.bd

hppt://www.valuebasedmanagement.net

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