How do you prioritize strategic business units and investments? This is an important question for marketers who want to effectively allocate resources and maximize profits. In this article, you’ll learn about four common marketing strategy frameworks that can help you analyze and rank business areas and investment opportunities. You will also learn how to apply them to specific situations and goals.
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BCG matrix
The BCG matrix is a classic tool for classifying business units based on market share and growth rate. It is divided into his four quadrants: Star, Dollar Box, Question Mark, and Dog. Star companies are high-growth, high-equity companies that require investment to maintain their status. A cash cow is a low-growth, stock-heavy company that generates steady cash flow and can fund other companies. Question marks are low share, high growth sectors that have potential but require further investment to become stars or cash cows. Dogs is a low-growth, low-share company with low profitability and may be sold or discontinued. The BCG Matrix helps you prioritize your business areas by determining which areas will bring the most benefit and which areas need more attention or elimination.
GE-McKinsey Matrix
The GE-McKinsey matrix is a more sophisticated version of his BCG matrix that takes into account his two dimensions: industry attractiveness and business sector competitiveness. Industry attractiveness is measured based on factors such as market size, growth rate, profitability, entry barriers, and competitive intensity. Competitiveness is measured by factors such as market share, brand reputation, customer loyalty, innovation, and cost structure. The GE-McKinsey matrix represents business units in a nine-cell grid to indicate strategic priorities. The units in the top left corner are the most attractive and powerful and should receive the most investment. Units in the bottom right corner are the least attractive and weakest and should be sold or relocated. The central cell unit requires further analysis and differentiation.
ansoff matrix
The Ansoff Matrix is a framework that helps you evaluate investment opportunities based on product and market type. It consists of four strategies: market penetration, market development, product development, and diversification. Market penetration is a strategy to increase sales in existing products and markets by attracting more customers, increasing usage, or increasing prices. Market development is the strategy of expanding geographically and entering new markets with existing products by targeting new segments or using new channels. Product development is the strategy of creating new products for existing markets by improving functionality, quality, or variety. Diversification is the strategy of introducing new products into new markets through the acquisition or development of new companies, technologies, or capabilities. The Ansoff Matrix helps you prioritize investment opportunities by evaluating the level of risk and reward associated with each strategy.
SWOT analysis
SWOT analysis is a simple and powerful tool that helps you identify your company’s strengths, weaknesses, opportunities, and threats. Strengths are internal factors that provide competitiveness or advantage. Weaknesses are internal factors that limit performance and potential. Opportunities are external factors that create favorable conditions and opportunities for your growth and improvement. Threats are external factors that pose challenges or risks to success or survival. SWOT analysis helps you prioritize strategic business units and investments by aligning your company’s strengths and opportunities, overcoming weaknesses, exploiting opportunities, and minimizing threats.
