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Brief history of boston consultancy group marketing essay

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The assignment required an inherent study of the Boston Consultancy Group matrix in order to develop an intricate understanding of its underlying concept. The BCG matrix is a chart developed by Bruce Henderson for Boston Consultancy Group in 1968. The fundamental notion of developing such a chart was to enable multi-divisional or multi-product companies to analyze its various business units (SBUs) or products. The matrix uses market growth rate and market share as the parameters for analyzing the portfolio of any organization. Thus acting as a powerful portfolio management tool, it helps the organization to examine and allocate resources among its various units or products.

The assignment explains the study of BCG matrix for Hindustan Unilever Limited (HUL). HUL marked the initiation of marketing brand fast moving consumer goods (FMCG). In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati Manufacturing Company, followed by Lever Brothers India Limited (1933) and United Traders Limited (1935). In November 1956, these three companies merged to form Hindustan Unilever Limited (then known as Hindustan Lever Limited).

Hindustan Unilever was recently rated among the top four companies globally in the list of “ Global Top Companies for Leaders” by a study conducted by Hewitt Associates in partnership with Fortune magazine and the RBL Group. The company was ranked first in the Asia-Pacific region and India.

The mission that inspires HUL’s is “ add vitality to life”. The company meets every need of nutrition, hygiene, and personal care, with brands that help people feel good, look good and get more out of life.

HUL have an extremely wide market exposure with over 35 brands spanning across 20 distinct categories such as soaps, detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water purifiers. HUL brands — like Lifebuoy, Lux, Surf Excel, Wheel, Fair & Lovely, Sunsilk, Clinic, Close-up, Pepsodent, Lakme, Brooke Bond, Knorr, Annapurna, Kwality-Walls are household names across the country and span many categories like soaps, detergents, personal products, tea, coffee, branded staples and ice cream. They are manufactured in over 35 factories, many of them being in backward areas of the country. HUL’s distribution network covers around 6. 3 million retail outlets.

The project will try to cover almost all the categories and label the entire product range into following characterized quadrants of BCG matrix,

· Cash Cows

· Question Marks

· Dogs

· Stars

Brief history of Boston Consultancy Group

The Boston Consulting Group was started up in 1963 by Bruce Henderson and from its inception sought to establish itself in the planning and was considered the pioneer of Business Strategy analysis. Boston Consulting Group was founded as the Management and Consulting Division of the Boston Safe Deposit and Trust Company – a subsidiary of The Boston Company. In 1968, Boston Company spinned off BCG as a separate subsidiary.

In 1965 Henderson thought that to survive, much less grow, in a competitive landscape occupied by hundreds of larger and better-known consulting firms, a distinctive identity was needed, and pioneered “ Business Strategy” as a special area of expertise for BCG. As its client list grew, Henderson targeted the nation’s best business schools. At some point of time he was said to have eclipsed McKinsey as top recruiter at Harvard, aggressively wooing its best students with high salaries and chance to make a difference in a cutting-edge firm. He encouraged the brilliant young mind he hired, to come up with innovative ideas that were meant to dazzle hardened corporate veterans.

In 1973, Bill Bain and others left BCG to form Bain & Company and two years later Henderson arranged an employee stock ownership plan (ESOP) so that employees could take the company independent from The Boston Safe Deposit and Trust Company.

In 1998 BCG created The Strategy Institute. Its purpose is to enrich the firm’s strategic thinking by applying insights from a variety of academic disciplines to the strategic challenges facing both business and society.

The Boston Consulting Group (BCG) ranked 8th overall and first among smaller companies in Fortune Magazine’s 2007 “ 100 Best US Companies to Work For” survey, based on strong employee development, a supportive culture, and progressive benefits.

BCG analysis is mainly used for Multi Category companies. All categories and products together are called Business portfolio. Thus, various entities of business portfolio may move forward by a different pace and with a different strategy. The BCG analysis actually helps in deciding which entities in your business portfolio are actually profitable, where you should concentrate on and what gives you a competitive advantage over others.

BCG Growth Share Matrix – The BCG growth share matrix was developed by Henderson of the BCG group in 1970′s. The matrix classifies businesses / SBU’s by

Relative Market Share – The market share of the business / SBU / Product in the market as compared to its competitors and overall product / category.

Market growth rate – The growth rate of the industry as a whole is taken into consideration from which the growth rate of the product is extrapolated. This growth rate is then pitched on the graph.

Once the businesses have been classified, they are placed into four different quadrants of the matrix. The quadrants of the matrix are divided into

Cash Cows – High market share but low growth rate (most profitable).

Stars – High market share and High growth rate (high competition)

Question marks – Low market share and high growth rate (uncertainty)

4) Dogs – Low market share and low growth rate (less profitable or may even be negative profitability).

On the basis of classification, strategies are decided for each SBU / Product. Let’s discuss the characteristics and strategies of each quadrant.

Cash cows are units with high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. . They are to be “ milked” continuously with as little investment as possible, since such investment would be wasted in an industry with low growth. They are regarded as staid and boring, in a “ mature” market, and every corporation would be thrilled to own as many as possible

Dogs , more charitably called pets are units with low market share in a mature, slow-growing industry. These units typically “ break even”, generating barely enough cash to maintain the business’s market share. They depress a profitable company’s return on assets ratio, used by many investors to judge how well a company is being managed. Dogs, it is thought, should be sold off. Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company.

Question marks (also known as problem children) are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines.

Stars are units with a high market share in a fast-growing industry. The hope is that stars become the next cash cows. When growth slows, if they have been able to maintain their category leadership stars become cash cows, else they become dogs due to low relative market share. Sustaining the business unit’s market leadership may require extra cash, but this is worthwhile if that’s what it takes for the unit to remain a leader.


Success Sequence in BCG Matrix – The Success sequence of BCG matrix takes place when a question mark becomes a Star and finally it becomes a cash cow. This is the best sequence which really gives a boost to the company’s growth and profits. The success sequence is entirely dependent on the right decision making.

Disaster sequence in BCG Matrix – Disaster sequence in BCG matrix takes place when a product which is a cash cow due to competitive pressure might be moved to a star. It fails due to competition and it is moved to question mark and finally it may have to be divested because of its low market share and low growth rate. Thus the disaster sequence might happen because of wrong decision making. This sequence affects the company as lot of investments is lost to the divested product. Along with this the money coming in from the cash cow which is used for other products too is lost.

Strategies based on the BCG Matrix

There are four strategies possible for any product / SBU, these strategies are:

1) Build – By increasing investment, the product is given an impetus so that the product increases its market share. For Example – Pushing a Question mark into a Star and finally a cash cow (Success sequence).

2) Hold – The company cannot invest nor it has other investment commitments due to which it holds the product in the same quadrant. For Example – Holding a star as higher investment to move a star into cash cow is currently not possible.

3) Harvest – The Company reduces the amount of investment and tries to take out maximum cash flows from the said product which increases its overall profitability.

4) Divest – Best observed in case of Dog quadrant products which are generally divested to release the amount of money already stuck in the business.

Therefore, the BCG matrix is the best way for business portfolio analysis. The strategies recommended after BCG analysis helps the firm decide the right line of action.


Hindustan Unilever Limited (HUL) is India’s largest Fast Moving Consumer Goods Company. The company engages itself with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages and is also one of the country’s largest exporters. HUL’s brands includes Lifebuoy, Lux, Surf Excel, Wheel, Fair & Lovely, Pond’s, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Knorr, Kwality Wall’s are household names across the country.

Currently, Unilever holds 51. 55% equity in the company while the rest of the shareholding is distributed among about 380, 000 individual shareholders and financial institutions.

BCG Matrix of HUL

Stars- Stars represent business units having large market share in a fast growing industry. They may generate cash but because of fast growing market, stars require huge investments to maintain their lead. Net cash flow is usually modest. SBU’s located in this cell are attractive as they are located in a robust industry and these business units are highly competitive in the industry. If successful, a star will become a cash cow when the industry matures.

Cash Cows- Cash Cows represents business units having a large market share in a mature, slow growing industry. Cash cows require little investment and generate cash that can be utilized for investment in other business units. These SBU’s are the corporation’s key source of cash, and are specifically the core business. They are the base of an organization. These businesses usually follow stability strategies. When cash cows lose their appeal and move towards deterioration, then a retrenchment policy may be pursued.

Question Marks- Question marks represent business units having low relative market share and located in a high growth industry. They require huge amount of cash to maintain or gain market share. They require attention to determine if the venture can be viable. Question marks are generally new goods and services which have a good commercial prospective. There is no specific strategy which can be adopted. If the firm thinks it has dominant market share, then it can adopt expansion strategy, else retrenchment strategy can be adopted. Most businesses start as question marks as the company tries to enter a high growth market in which there is already a market-share. If ignored, then question marks may become dogs, while if huge investment is made, and then they have potential of becoming stars.

Dogs- Dogs represent businesses having weak market shares in low-growth markets. They neither generate cash nor require huge amount of cash. Due to low market share, these business units face cost disadvantages. Generally retrenchment strategies are adopted because these firms can gain market share only at the expense of competitor’s/rival firms. These business firms have weak market share because of high costs, poor quality, ineffective marketing, etc. Unless a dog has some other strategic aim, it should be liquidated if there is fewer prospects for it to gain market share. Number of dogs should be avoided and minimized in an organization.


High Growth Rate Industries

Low Growth Rate Industries


Anti-Ageing Cream

Tooth Paste

Skin And Fairness Cream

Men’s Fairness Product


Dish Wash

Detergent Powder

Toilet Soaps

Processed Food

Packed Wheat Flour

Tea Bags

Washing Cakes

Ice Creams



Liquid Soaps

Shaving Products

Jam & Jellies

Moisturizing Creams

Packed Branded Tea



High Market Share

Low Market Share

AXE Deodorant

Fair & Lovely Fairness Cream


Surf Excel



Clinic Plus



Kissan Jam


Kwality Walls


Red Label

Close Up


Fair & Lovely Menz Active



Dove Shampoo


Taj Mahal Tea Bags

Kissan Ketchup




Brooke Bond Sehatmand

Knorr Meal Maker Range

On the basis of above mentioned analysis, almost every product of HUL is being analysed against the industry to which it belongs and then placed in one of the 4 quadrants of BCG matrix.



AXE Deodorant

Fair & Lovely

Lakme Anti Ageing



Surf Excel



Kwality Walls

Kissan Jam

Knorr Soup


Close Up



Fair & Lovely Menz Active




Taj Mahal Tea Bags

Kissan Ketchup

Knor Meal Maker


Clinic Plus



Red Label



Brooke Bond Sehatmand



An in-depth analysis of the entire market’s data has been done and the various SBUs and products of HUL have already been classified into the four quadrants of BCG matrix. Subsequent to their allocation into one of the four quadrants a detailed parallelism will be drawn with the various strategies being discussed in the first chapter and will be quote conclusively.

1. COWS: Since the cows needed to be milked now and then, and efforts are to be made to ensure that they maintain the largest share in the market the following strategies are being adopted by HUL;

Product Development:

Sunsilk created the largest community for Indian girls which is – www. sunsilkgangofgirls. com.

Sunsilk innovatively comes up with an entire product range of Soft & Smooth, Thick & Long, Damaged Repair, Hair Fall Solution, Stunning Black Shine and Anti Dandruff.

Clinic Plus has evolved to keep in step with the changing needs of consumers by constantly renovating its offering to make sure it is the best solution for the eternal desire of having long hair for both mom and daughters.

Vaseline the moisturising cream has developed itself from just being a petroleum jelly to a leader among moisturisers with Vaseline Total Moisture, Vaseline Aloe Cool, Fresh Vaseline Healthy White and Vaseline Lip Care.

Concentric Diversification:

To keep milking its cash cow Red Label, the HUL after floating its company entered into a series of merger and acquisition of related tea companies starting with Brooke Bond and then Lipton. Lipton was added because it catered to only the premium segment whereas Red Label focussed upon middle level segment. Thus a manoeuvred approach to widen the customer base.

2. STARS: The stars though generate funds but need to be constantly invested into because their prospectus of becoming cash cows depends on the pre-requisite of them being the market leader.

Market Development:

AXE came out with highly innovative products (like Axe Instinct, Axe Dark Temptation, Axe Pulse and Axe Denim) and intensive sexually provocative advertisements thereby converting the non-users of deodorant products into its users.

Market Penetration:

Kissan Jam’s new squeeze collection of different fruit flavours namely mango, blueberry, etc. in attractive and kids’ friendly packaging is an attempt to boost more sales within the existing kid segment.

Joint Venture:

Initially HUL and Lakme Limited, a TATA company, came out with Lakme Unilever Limited, a 50: 50 joint venture. Though later on the Lakme Limited sold its entire divested selling its entire shares to HUL.

Backward Integration:

The Doom Dooma and Tea estate, two production facilities of Unilever were merged with Brooke Bond. Later in 1995, Brooke Bond and Lipton were merged to form Brooke Bond Lipton India Limited (BBIL) 30. BBIL acquired Kwality and Milk food 100% brand names and distribution assets accordingly and HUL introduced Wall’s ice creams.

3. QUESTION MARKS: Since they are the new entrants or strugglers in the market for major share where the market is changing at a high pace, efforts are being made to make sure that the gain on their market share.

Product Development:

Pepsodent entered into a major modification of its Germicheck and Whitening toothpaste by coming up with the Sensitive and Gumcare range of toothpastes.

Knor soups coming up with the entire range of soups ranging from tomato mix vegetable, Chinese to chicken soups.

Market Penetration:

Kissan Ketchup has come up with a new packaging called “ Pichkoo”, the attempt has been to induce the users to use more and more of ketchup every time they use it.

4. DOGS: Dogs they are run on breakeven point and in the eyes of an accountant they are not even viable. But can be important for synergies;


In line with company’s business strategy to exit non-core business, the Company has disposed its Mushroom business, which formed part of KICM (Madras) Ltd and its Seeds Business also in the year 2004.


The existing strategies for the various segment of the entire product range of HUL have already been concluded. Certain recommendations are hereby given for the selection and adoption of strategies.

While implementing the strategy due consideration should be given to the above shown movements of products through various quadrants in order to ensure that only strategies within possibility of success sequences are being executed.


Though HUL has been implementing several strategies to outperform and boost up its market share. Following are some strategies that might lead to generation of cash cows:


¶ Taj Mahal Tea bags in order to capture the market share of Tetley Tea bags should also come up with its own range of Herbal or Green Tea bags. (Product Development)

¶ Close Up being a leader in the gel based toothpaste segment should try to cut the monopolistic holding of Colgate in the market by:

a) Coming up with innovative cream based toothpastes

b) Entering into the toothpowder industry31

¶ Kissan Ketchup can boost up its market share to outcast Maggi by expanding its geographical base by going for wide scale product distribution, thereby substituting ketchup’s name with Kissan ketchup in the minds of users. (Market Development)


¶ Having Vim, Wheel, Lifebuoy and Lux in the star segment and that too in an industry with high growth rate, HUL should go for backward integration in order to secure the supply of raw material for all the soaps. (Backward Integration)

¶ To maintain its market share Lakme Anti-Ageing should carry on excessive interactive sessions with high network individuals. Record those sessions and use them as advertisements to get their product indirectly endorsed by them. (Market Development)

3. DOGS:

¶ Brooke Bond Sehatmad should be sold off because the customer tastes and nutritional requirements have changed from sipping vitamin B enriched tea to anti-oxidants enriched tea. With the evolution of green tea, the demand by health conscious individuals are more of anti-oxidants rather vitamin b, as fruits provides an ample source of vitamins. (Liquidation).

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