bcg asignment

8/9/2019 BCG Asignment

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Customer Proftability Analysis Using BCGmatrix or Derricks Ice-Cream Co.

Derricks Ice-Cream Company is located in modern premises andmanufactures and distributes 30 dierent ice-cream product lines fromits suburban base in the UK. he products are distributed by Derrickso!n "eet of refri#erated trucks to si$ ma%or !holesale distributors.

&nnual sales are currently around the '(0m le)el* distributed amon#the !holesalers as indicated in able (. Derricks control about 3+, ofits metropolitan market* but this shrinks to less than (0, in outlyin#areas !here there are many small competitors.

arket s!ares or six customers

Customer " #ales&rdrons afers (/utler Ices (Cahills Cones +Donlea)y Ices 01n#land ed#es (2rankston Chocs 04thers 0(

$otal %&&

he company usually hold up to four !eeks of stock in their centralcold stores to meet the distribution re5uirements of their si$ ma%orcustomers. he cold stores cost is appro$imately '+00000 p.a. to run*but e$cess capacity can be hired out to other non-competin# 6rms.

he re5uirement of meetin# the sometimes uni5uely speci6cre5uirements of customers has been causin# Derricks mana#ementsome serious headaches recently. hey reco#ni7e the importance of aclient-focused approach to marketin# and distribution* but arebe#innin# to feel that they are bein# e$ploited by some customers !hoare ne)er satis6ed !ith the le)el of ser)ice pro)ided* ho!e)ere$tensi)e it may be and this is costin# them a lot of money.


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8o* to analy7e the current situation !e !ill form a /C9 matri$ andrecommend decision on its results./C9 matri$ !ill help us to e$amine distributors in he companysportfolio on the basis of their related market share and industry #ro!th

rates.In other !ords* it is a comparati)e analysis of business potential andthe e)aluation of en)ironment.&ccordin# to this matri$* business could be classi6ed as hi#h or lo!accordin# to their industry #ro!th rate and relati)e market share.

'elati(e arket #!are: 8/U 8ales this year ; leadin# competitorssales this year.

arket Gro)t! 'ate: Industry sales this year - Industry 8ales lastyear.

he dimension of business stren#th* relati)e market share* !illmeasure comparati)e ad)anta#e indicated by market dominance. hekey theory underlyin# this is e$istence of an e$perience cur)e and thatmarket share is achie)ed due to o)erall cost leadership./C9 matri$ has four cells* !ith the hori7ontal a$is representin# relati)emarket share and the )ertical a$is denotin# market #ro!th rate. hemid-point of relati)e market share is set at (.0. if all the 8/Us are insame industry* the a)era#e #ro!th rate of the industry is used. hile*if all the 8/Us are located in dierent industries* then the mid-point isset at the #ro!th rate for the economy.


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4rder fre5uency

Ao!* !e rate all the si$ customers on an (( point scale i.e. from -+ to +and e)aluate their performance* !here !e do not ha)e any information!e #i)e a 7ero that is !e ha)e a neutral position to!ards it.

?arameters Customers&rdron

/utler

Canhill

Donlea)y

1n#land

rankston

Discount or &rdron afers from the information #i)en !e ha)ethat it re5uires lo! discounts for the )olume and it maintains lar#ein)entory and thus ha)e hi#hly predictable deli)ery re5uests andholdin# re5uirements. hus* on the scale !e #i)e it a 2 for askin# lo!discounts and + for order fre5uency as its deli)ery re5uest are hi#hlypredictable. &lso as it employ standard packa#in# thus it has no uni5uepacka#in# and thus !e #i)e it a + on that parameter.he same is done for all the si$ customers dealersE and thus itsubstitutes the market #ro!th parameter on our /C9 Fatri$.Ao!* !e calculate the relati)e market share from the data #i)enabo)e>


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Ao! for our /C9 !e ha)e ln


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1rankston C!ocs/ It is on the mar#in of HJ cate#ory and theHDo#J cate#ory. It is a bi# customer as it accounts for 0, of thesales i.e. ' million* so !e ha)e to make special pro)isions for it.It should be helped in becomin# independent in theirmerchandisin# procedures and !e should also #i)e assistance

for in)entory control and for the orderin# se#ment.

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