2020 is nearly over – you’ve survived unprecedented challenges; no doubt pivoted your offer and updated your messaging. Now, it’s time to focus your attention on what comes next: growth in revenue and profit. So, let’s talk about why you need a competitive strategy using the BCG Matrix for 2021. Specifically, how to capitalise on market share opportunities.
Need help with planning for 2021 and beyond? We offer services from strategy workshops to research to 5-year strategic marketing plans. We have ex-directors who took part in everything from organisation design to large scale change programmes and ‘hot houses’.
Why strategy matters
Strategy is what underpins your every marketing move. From the creation of buyer personas to channel analysis; value proposition to market identification, an effective marketing strategy will tell you who to target, with what and how.
A competitive marketing strategy analyses your market, competitors and customers to generate a long term, defensive stance geared around ROI. For those looking to the future, a Boston Consulting Group Matrix (BCG matrix), or Boston growth share matrix as it is also known, is a modelling tool that can help companies understand where market share growth opportunities lie and gain competitive advantage. Up to half of all Fortune 500 companies are said to have used a growth share matrix at one point in time.
As a tool focused on unlocking potential, the BCG Matrix is arguably more important than ever as we move into a post-Covid 2021.
How to use the BCG Matrix
The BCG matrix helps businesses to decide where investment should and should not be made. It is essentially a chart that categorises product lines into 6 distinct cells according to their share of served market to that of their largest competitor:
- Stars – products with the best market share that generate the most cash.
- Question marks – high growth but low market share.
- Cash cows – products that generate more cash than they consume.
- Dogs – low market share and low growth rate.
- War horses – product in decline; market leader.
- Dodos – product in decline; market follower.
The real function behind the BCG Matrix is to allocate resources in the most profitable areas of the business. This is cash flow optimisation at its finest. Why wouldn’t you allocate your marketing budget to areas that have the most opportunity for growth?
Competitive strategy and BCG Matrix importance
Whether you use BCG for competitive strategy or research tools including SWOT analysis to optimise, the key message is planning. Doing what you have always done and hoping for different results fails to consider the dynamics of the market around you.
Remember that marketing strategy is the logic by which you will achieve your marketing goals. Competitive strategy is a long-term strategy to achieve competitive advantage over your competitors. The two concepts are interlinked and any good business plan will contain elements of both to make a business ‘viable’ for investors. So why do companies ignore marketing planning and reduce the strategy to a one-page static document or a one-page spreadsheet for the marketing budget? Both may lead to lower returns versus the market.
Industries go through growth phases, competitors innovate, customers demand change. Crucially, as argued by Levitt, growth stalls because of a failure of management. This means that some management fail to align resources to growth opportunities so their businesses miss out. In summary, how many businesses “kick the can down the road” on major change, transformation projects and digital investment?
Marketing guiding competitive strategy
Firstly, who do you think should lead a competitive strategy? Perhaps you expect the owner, CEO or MD to be the strategic guru to lead you down the path to growth. Alternatively, maybe the CFO as part of the annual budgeting cycle could look beyond the numbers. Maybe the board should come together to develop the Annual Operating Plan (AOP) with input from all department heads? Interestingly, the area of the business with a skillset most suited to competitive strategy is marketing.
Secondly, if marketing has the tools, data and skills to research the market, competitors and customers, why is it so often overlooked or done to varying degrees elsewhere? Some businesses have no CMO, Marketing Director or Head of Marketing to ask. Others never gave marketing a seat at the boardroom table which may hamper success. Customer-centric businesses recognise that marketing plays a key role in strategy. Additionally, FMCG and ICT businesses may prioritise product over marketing or sales over marketing, placing marketing under other departments.
We have paid subscription databases, professional librarians and even our doctors for research. Furthermore, we use a level 7 Chartered Marketer and former Marketing Director for all of our strategy and plans. Your advice comes from an expert with the experience and qualifications to interpret and explain the best course of action. Would you expect anything less?
Get the right marketing strategy
Need help identifying your stars from your war horses? Now you have read why you need a competitive strategy using the BCG Matrix, why not put it into practice. We offer more strategic marketing advice and services than we list on our website so why not find out more. At the last count, we offer 14 types of health check or audit to help enhance your marketing.
If you would like support with your competitive marketing strategy for 2021, book a free consultation with one of our team. We have over 30 years’ experience in delivering marketing ROI. Furthermore, see why using a qualified marketer pays for itself.
Alternatively, you can request more information about our marketing strategy and support services by filling in our 30 second contact form.