BKG matrix (Boston consulting group)

Model or matrix БКГ occurrence was logic end of one research work spent in due time by experts of the Boston consultative group (Boston Consulting Group) in the field of strategic planning. At the heart of matrix БКГ the model of life cycle of the goods according to which the goods in the development take place four stages lays: an exit on the market (the goods - "problem"), growth (the goods - "star"), a maturity (the goods - "milk cow") and recession (the goods - "dog").

For an estimation of competitiveness of separate kinds of business in matrix БКГ two criteria are used: rate of growth of the branch market; a relative share of the market. Rate of growth of the market is defined as the average value of rates of growth of various segments of the market in which the enterprise operates, or is accepted equal to rate of growth of a total national product. Rates of growth of branch of 10 % also are more considered as high. The relative share of the market is defined by division of a share of the market of considered business into a share of the market of the largest competitor.

Value of a share of the market, equal 1, separates products - market leaders - from followers.

At the heart of matrix БКГ two assumptions lay:

-The business having an essential share of the market, gets as a result of action of effect of experience competitive strategic advantage concerning production costs. From here follows, that the largest competitor has the greatest profitability at sale for market prices and for it financial streams are maximum.

-Presence in the growing market means the raised requirement for financial assets for the development, i.e. updating and expansion of manufacture, carrying out of intensive advertising etc. If rate of growth of the market is insignificant, for example the mature market the goods do not require considerable financing.

In that case when both hypotheses are carried out, it is possible to allocate four groups of the markets of the goods, corresponding to various priority strategic targets and financial requirements:

· "Problems" (fast growth / a small share): the goods of this group can appear very perspective as the market extends, but demand considerable means for growth maintenance. With reference to this group of products it is necessary to solve: to increase a share of the market of the given goods or to stop their financing.

· "Stars" (fast growth / a high share) are market leaders. They make considerable profit thanks to the competitiveness, but also require financing for maintenance of a high share of the dynamical market.

· "Milk cows" (slow growth / a high share): the goods, capable to bring has more profit, than it is necessary for maintenance of their growth. They are the basic source of financial assets for диверсификации and scientific researches. A priority strategic target - "harvesting".

· "Dogs" (slow growth / a small share) are products which are at a great disadvantage on costs and have no growth possibilities. Preservation of such goods is connected with considerable financial expenses at small chances of position improvement. Priority strategy - the termination of investments and modest existence.

Pricing strategies.

Strategy of the high prices

Strategy of the high prices is applied, as a rule, to new, for the first time appeared on the market and to the goods protected by the patent. This strategy use also for the goods in relation to which apply the so-called "prestigious" price and which is focused on the buyers giving great value to quality, uniqueness, the goods status. The purpose of strategy of the high prices - superprofit reception by «removals of cream» from that group of buyers for which these goods are of great value. Strategy of "removal of cream» is possible, when the firm is convinced, that there is a circle of buyers ("pioneers", fans new), which show demand for these goods under any price if only to own these goods at present. After the lapse of some time when this segment of the market will appear sated, the firm gradually reduces the price to pass to development of other segments of the market, passing, thus, from the high, prestigious price to the price «to penetrations.

In the high prices the firm has an opportunity:

· To reveal new segments of the market (originally strategy of the high prices is spent for the segments not sensitive to the price);

· To receive the information on demand, production costs; to delay response concerning the prices from manufacturers of similar production;

· Qualitatively to improve production;

· Faster to cover a part of the expenses connected with research and working out of new production.

· Strategy of the average prices

Strategy of the average prices is the most typical strategy for the majority of firms. As a rule, those firms which are interested in stability and preservation of a favorable climate for the activity in the market resort to this strategy and consider profit reception as the long-term policy. Many firms consider strategy of the average prices of the most fair as it excludes possibility «wars of the prices». Besides, this strategy does not lead to occurrence of the new competitor, does not allow separate firms to make profit at the expense of buyers and at the same time gives the chance to receive fair profit on the invested capital.

Strategy of the low prices

Considering strategy of the low prices, we will notice, that here it is a question not about «бросовых* the prices, and of rather low prices for the goods which it is ready below the prices of the similar goods-competitors. This strategy is popular, it is most safe for firm as thanks to unattractiveness for potential competitors reduces the risk arising because of the unknown relation of the buyer to the new goods.

Strategy of the low prices is used by firms on purpose:

· Penetrations on a foreign market;

· Increases in a share of the goods in home market;

· Exit on the mass market;

· дозагрузки capacities;

· недопущения bankruptcies at the given stage;

· Counting on that for the goods there will be a commodity market for a long time.

· Strategy of the low prices is known still as «the price недопущения», «the replacement price».

· Strategy of the target prices

Appointment of strategy of the target prices (or target profit) is the certain size of profit: for example, high profit within any concrete year, satisfactory volume have arrived for a number of years (for example, 20 million rbl. a year within 5 years); reception of certain percent of profit (for example, 15-20 %) on the invested capital. At realisation of this strategy sales volumes and the prices can vary, but the planned size of profit should be provided.