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    8 Sbu, BCG, PLC

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    Radhul Dev
    Strategic Business Units (SBUs) are relatively autonomous divisions within a large company that operate as independent profit centers responsible for a particular product or activity. SBUs have separate marketing plans, competition analyses, and marketing campaigns. They are able to affect most factors influencing their performance and are responsible to the parent corporation. The success of an SBU depends on the autonomy given to its manager, how it shares resources with other SBUs, and how the corporation adopts changes in the market.

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    8 Sbu, BCG, PLC

    Uploaded by

    Radhul Dev
    62 views31 pages
    Strategic Business Units (SBUs) are relatively autonomous divisions within a large company that operate as independent profit centers responsible for a particular product or activity. SBUs have separate marketing plans, competition analyses, and marketing campaigns. They are able to affect most factors influencing their performance and are responsible to the parent corporation. The success of an SBU depends on the autonomy given to its manager, how it shares resources with other SBUs, and how the corporation adopts changes in the market.

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    8 SBU, BCG, PLC

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    Strategic Business Units (SBUs) are relatively autonomous divisions within a large company that operate as independent profit centers responsible for a particular product or activity. SBUs have separate marketing plans, competition analyses, and marketing campaigns. They are able to affect most factors influencing their performance and are responsible to the parent corporation. The success of an SBU depends on the autonomy given to its manager, how it shares resources with other SBUs, and how the corporation adopts changes in the market.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    62 views31 pages

    8 Sbu, BCG, PLC

    Uploaded by

    Radhul Dev
    Strategic Business Units (SBUs) are relatively autonomous divisions within a large company that operate as independent profit centers responsible for a particular product or activity. SBUs have separate marketing plans, competition analyses, and marketing campaigns. They are able to affect most factors influencing their performance and are responsible to the parent corporation. The success of an SBU depends on the autonomy given to its manager, how it shares resources with other SBUs, and how the corporation adopts changes in the market.

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    Strategic Business Unit

    (SBU)
    A fully-functional profit centre of a business
    relatively autonomous division of a large
    company that operates as an independent
    enterprise with responsibility for a
    particular range of products or activities
    • SBU’s typically have
     Separate marketing plan
     Competition Analysis
     Marketing campaign, etc.
    • An SBU may be a business unit within a
    larger corporation, or it may be a business
    unto itself or a branch.
    • Corporations may be composed of multiple
    SBUs, each of which is responsible for its
    own profitability.
    • General Electric is an example of a
    company with this sort of business
    organization.
    • SBUs are able to affect most factors which
    influence their performance.
    • Managed as separate businesses, they are
    responsible to a parent corporation.
    • General electric have 49 SBUs.
    Advantages of SBU
    •Allows for the organization to concentrate on
    the target audience and provide cost
    leadership to the company.
    •Allows a company to meet the distinct needs
    of the target audience by supplying products
    and services that are valued by those specific
    user.
    Advantages of SBU
    • Advantages provided through the ability to
    offer more value to your customers.
    • Own separate ability to craft industry-
    specific strategy as it relates to their
    function.
    • Helps to understand which business
    activities contribute the most value.
    • Enable the ability to make decisions based
    on resources and efficiencies.
    There are three factors that are generally seen
    as determining the success of an SBU
    •1. The degree of autonomy given to each
    SBU manager,
    •2. The degree to which an SBU shares
    functional programs and facilities with other
    SBUs, and
    •3. The manner in which the corporation
    adopts new changes in market.
    BOSTON CONSULTING
    GROUP (BCG) MATRIX
    • Developed by BRUCE HENDERSON of the
    BOSTON CONSULTING GROUP.
    • According to this technique, businesses
    or products are classified as low or high
    performers depending upon their market
    growth rate and relative market share.
    Market share and Market growth

    • Market share is the percentage of the total


    market that is being serviced by your
    company, measured either in revenue
    terms or unit volume terms
    • Market growth is used as a measure of a
    market’s attractiveness.
    Business Portfolio Analysis (BCG-Matrix)
    based on the combination of market growth and market
    share relative to the next best competitor.
    High
    Stars Question Marks
    Market Growth Rate

    Cash Cows Dogs

    Low
    High Low
    Relative Market Share
    Life-Cycle Strategies
    Learning Goals

    1. Know the stages of the product life


    cycle
    2. Realize how marketing strategies
    change during the product’s life cycle
    Product Life-Cycle

    • A new product progresses through a


    sequence of stages from introduction to
    growth, maturity, and decline. This sequence
    is known as the product life cycle and is
    associated with changes in the marketing
    situation, thus impacting the marketing
    strategy and the marketing mix.

    10- 18
    Sales and Profits
    Over A Product’s Life
    Product Life-Cycle
    Strategies
    • The Typical Product Life Cycle (PLC)
    Has Five Stages
     Product Development, Introduction,
    Growth, Maturity, Decline
     Not all products follow this cycle:
    • Fads
    • Styles
    • Fashions
    10- 21
    Figure 10-3:
    Styles, Fashions, and Fads
    Product Life-Cycle
    Strategies

    PLC Stages • Begins when the


    company develops a
    • Product development new-product idea
    • Introduction • Sales are zero
    • Growth
    • Investment costs are
    • Maturity
    high
    • Decline
    • Profits are negative

    Goal 2: Realize how marketing strategies change during the product life cycle
    Product Life-Cycle
    Strategies

    PLC Stages • Low sales


    • High cost per customer
    • Product development acquired
    • Introduction • Negative profits
    • Growth • Innovators are targeted
    • Maturity • Little competition
    • Decline

    Goal 2: Realize how marketing strategies change during the product life cycle
    Marketing Strategies:
    Introduction Stage
    • Product – Offer a basic product
    • Price – Use cost-plus basis to set
    • Distribution – Build selective distribution
    • Advertising – Build awareness among early
    adopters and dealers/resellers
    • Sales Promotion – Heavy expenditures to
    create trial

    Goal 2: Realize how marketing strategies change during the product life cycle
    Product Life-Cycle
    Strategies

    PLC Stages • Rapidly rising sales


    • Average cost per
    • Product development customer
    • Introduction • Rising profits
    • Growth • Early adopters are
    • Maturity targeted
    • Decline • Growing competition

    Goal 2: Realize how marketing strategies change during the product life cycle
    Marketing Strategies:
    Growth Stage
    • Product – Offer product extensions, service,
    warranty
    • Price – Penetration pricing
    • Distribution – Build intensive distribution
    • Advertising – Build awareness and interest in
    the mass market
    • Sales Promotion – Reduce expenditures to
    take advantage of consumer demand

    Goal 2: Realize how marketing strategies change during the product life cycle
    Product Life-Cycle
    Strategies

    PLC Stages • Sales peak


    • Low cost per customer
    • Product development • High profits
    • Introduction • Middle majority are
    • Growth targeted
    • Maturity • Competition begins to
    • Decline decline

    Goal 2: Realize how marketing strategies change during the product life cycle
    Marketing Strategies:
    Maturity Stage
    • Product – Diversify brand and models
    • Price – Set to match or beat competition
    • Distribution – Build more intensive
    distribution
    • Advertising – Stress brand differences and
    benefits
    • Sales Promotion – Increase to encourage
    brand switching

    Goal 2: Realize how marketing strategies change during the product life cycle
    Product Life-Cycle
    Strategies

    PLC Stages • Declining sales


    • Low cost per customer
    • Product development • Declining profits
    • Introduction • Laggards are targeted
    • Growth • Declining competition
    • Maturity
    • Decline

    Goal 2: Realize how marketing strategies change during the product life cycle
    Marketing Strategies:
    Decline Stage
    • Product – Phase out weak items
    • Price – Cut price
    • Distribution – Use selective distribution:
    phase out unprofitable outlets
    • Advertising – Reduce to level needed to
    retain hard-core loyalists
    • Sales Promotion – Reduce to minimal level

    Goal 2: Realize how marketing strategies change during the product life cycle

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