Author: Marketing Lake

The GE McKinsey Matrix, also known as the McKinsey Nine Box Matrix: is a strategic tool used for business portfolio analysis that provides a structured way to evaluate business units on the attractiveness of the market involved and the strength of the firm’s position in that market.

The GE matrix was developed in the 1970s by McKinsey and Company consultancy group.

Many people ask the question: “GE matrix consists of how many cells?”

Well, as you know it is known as Mckinsey Nine Box Matrix as it has a nine-cell grid that measures business unit strength against industry attractiveness.

The GE McKinsey Matrix comprises two axes. 

The Y-axis represents the attractiveness of the market, whereas the x-axis represents the competitiveness and competence of the business unit. 

Both the axes get classified into three categories (High, Medium, Low), consequently creating nine cells.

You can learn more about the nine cells by clicking on this link.

Factors Affecting Market Attractiveness:

• Size of the market
• Market growth rate
• Market profitability
• Level of competition
• Demand Variability
• Market segmentation
• Industry structure

Factors Affecting Competitive Strength:

• Total market share
• Production capacity
• Relative brand strength
• Management strength
• Cost structure compared to competitors
• Level of product differentiation
• Production flexibility

Why do businesses use GE McKinsey Matrix?

The scarcity of resources is a big problem in the business world. With limited resources but many opportunities for using them, businesses got to choose a way to use their cash best.

It makes it very hard for a business to decide on which products the company should invest in but, after the development of GE McKinsey Matrix, it is no longer a headache.

GE McKinsey Matrix strategies:

The GE McKinsey matrix consists of three main strategies.

• Grow: In this category, the business units have high market attractiveness and high business unit strength. Therefore, corporates prefer to invest in these business units to generate high returns in the long run.

• Hold/Selectivity: In this category, the position of business units fall, and their future growth is unclear. Therefore, you hold the business as it is. It happens because there is a high competition that makes it hard for the business to catch up. Thus, in this case, you wait and see whether the business gains importance in the market or not.

• Harvest/Divest: In this category, the business unit becomes unattractive and weak. Therefore, you sell or liquidate the business. 

How to use the tool:

•  Determine the industry attractiveness of each business unit

 It includes the following steps:

1. List down factors
2. Allocate weights
3. Provide a rating to the factors
4. Determine the final score

• Determine the competitive strength of each business unit

Step 2 is the same as Step 1. Only this time, the competitive strength of a business unit is evaluated.          

1. Factors list
2. Weight allocation
3. Factors rating
4. Total score calculation

• Plot the information on the GE McKinsey Matrix

The next step is to position the score of industry attractiveness and competitive strength on the matrix. A circle should represent each business unit, and it should indicate the market size of each business unit as compared to other business units.

• Analyze the information

The next step is to analyze the information. An organization can adopt three investment strategies for each business unit.

They are:

1. Grow or Invest areas
2. Income or Selectivity areas
3. Harvest or Divest areas

• Projection of the future potential of each business unit

After the analysis of the matrix, a company can see the current industry attractiveness and competitive strength of each business unit but doesn’t predict the future potential.

To have a projection of the future, the company should consult with industry analysts to determine whether the industry attractiveness will grow, stay the same, or decrease in the future.

• Prioritize investments

The last step is to decide where to invest the companies money.

GE McKinsey Matrix makes this step easier by evaluating the business units and identifying the best ones to invest.

A practical example of GE McKinsey Matrix

Divest or Harvest Strategy by Microsoft in Zune mp3 player-

In 2006, Microsoft launched its mp3 player named Zune. It gained a lot of attention, and Microsoft made a lot of profit through it. But a year later, Apple launched the iPhone, and mp3 players started escaping from the market. It resulted in a massive decline in the demand for mp3 players like Zune.

To get rid of the loss caused by this, Microsoft discontinued its mp3 player brand Zune in 2008.

Conclusion

Many businesses have various strategic business units (SBUs), all competing for investment. Therefore it makes it very hard for an organization to decide where to invest its limited resources. 

The GE Mckinsey Matrix model is useful for analyzing your business units against multiple factors and provides a structured means to helps organizations understand where to make investments.

The model helps in determining the current situation of the business, as well as future positions of the business.

Thus this information is used as an input for making investment decisions.

You can also check our article on Millennial Marketing by clicking on this link.

. . .

Ayush Verma

Ayush Verma is currently a digital marketing intern at Marketing Lake and pursuing his undergraduate degree from Dr D Y Patil Global Business School And Research Centre, Pune. He is highly motivated to improve his skills and grow professionally.

A product with a creative packaging is enough to grab the attention of a customer.

Yes, we get it. The quality of the product matters the most.

But as you all know, there are a lot of different brands making similar products.

So, have you ever realized what makes a product different?

You guessed it right.

Packaging

You might have heard of the saying,  “First Impression Is The Last Impression.”

The same is the case with packaging.

The packaging will be every customer’s first impression of your product. It is what compels a customer to buy a product.

Creative packaging works as a marketing tool as it tells the story of the brand to its customers and also as a silent salesperson.

It also creates brand recognition. If a product has a unique packaging cover, consumers always recognize it.

Now, think of different ways of creative product packaging.

Difficult Task?

No worries, we got you covered.

Here are some creative packaging tips to keep in mind:-

• Sustainable Approach

With pollution emerging as a top threat to the ecosystem, you would not want to use non-biodegradable and non-recyclable materials and pollute the environment.

According to a study, by 2025, there could be 1 ton of plastic for every 3 tons of fish in the ocean.

When you use sustainable material for the packaging of your product, it gives a positive message about your brand to the consumers.

After all, consumers want to feel good about their purchases.

Replace plastic material with the paper.

The world recycles over 90% of paper, whereas only 30% of plastic.

A great example of this is Amazon.

Amazon, the e-commerce giant, is making maximum use of paper packaging for carrying out its shipment process.

Through its “Frustration-Free Packaging” initiative, the company is trying to use the materials that are 100% recyclable.

This type of packaging also eliminates the need for an additional shipping box.

• Adding Functionality into the Design.

Customers like packaging that’s functional.

The main reason behind it is that it adds value to the product.

Mcdonald’s, the American fast-food giant’s transports packaging in over 100 countries and uses paper over plastic.

In 2015, Mcdonald’s thought of a creative paper packaging design and launched a bag-tray packaging, which could turn into a tray.

Creative paper packaging, isn’t it?

These innovative and creative ideas help a brand to stand out and have a competitive age over its competitors.

The bag-tray packaging is a prime example of how to integrate some functionality into your packaging design.

• Personalized Packaging

Personalized packaging makes it convenient for customers to purchase because the packaging reflects the values represented by the brand and the product.

In the age of the digital world, personalized marketing is an essential element for marketing since it draws a lot of attention to the product and the brand.

The best example one could get about personalized packaging is Coca-Cola.

What started with Coca-Cola is now an industry trend.

There is not a single human being on planet earth who has not heard of Coca-Cola.

I know it’s a little exaggerated

But given the fact that it is the most recognized word in the world after ok, it has to be the best brand.

What if I say you can have your name written on the package of their product?

You would go insane.

But this is what they did with their ‘Share a Coke’ campaign.

The campaign gained a lot of attention, and the consumers began seeking out coke bottles and cans with their names on them.

As a result, sales of the company started increasing by 0.4% year-over-year.

You can also check Tsutsumi: the best Japanese art of packaging here.

Conclusion

If you are running a business, creativity is the answer to all your problems.

Likewise, creative packaging solutions can have a positive effect on a product’s and business’s marketing campaign and can also cut the shipping cost.

The most important thing is to keep your brand’s true identity and values in mind while making a creative package.

Then comes the selection of the material of the package.

Materials like chlorinated plastics pollute the environment.

Therefore, always use eco-friendly materials for the packaging of your product, materials that can be recycled.

After all, the Earth is what we have in common.

. . .

Vicky Kumar Sen
Vicky Kumar Sen is currently a senior digital marketing intern at Marketing Lake and pursuing PGDM from Dr D Y Patil B-School, Pune. He is very enthusiastic to become a professional digital marketer.

Ayush Verma
Ayush Verma is currently a digital marketing intern at Marketing Lake and pursuing his undergraduate degree from Dr D Y Patil Global Business School And Research Centre, Pune. He is highly motivated to improve his skills and grow professionally.

Who are Millennials and Gen Z?

Millennials and Gen Z are the generations of people born between the early 1980s and early 1990s.

According to the Merriam-Webster Dictionary:

They are a very diversified group and have different characteristics and choices.

With the rise of social media the Millennials and Gen Z have become very much aware of the things taking place in their surroundings and have become outspoken about the things which they don’t like and due to this marketing to Millennials and Gen Z has become more effective.

How do we market to such a diverse and large group?

Well, it’s pretty hard to market a product to this group because they tend to switch brands a lot, which indicates that brands must do more to attract them and recognize their evolving lifestyle and change with them.

Therefore you need to invest both time and money into understanding how millennial work and how to market to Millennials and Gen Z.

You can learn more about Millennial marketing by clicking on this link.

Brands often outsource this work to various marketing agencies who understand this Target group properly.

Best ways to market to Millennials and Gen Z?

• CAUSE MARKETING

This marketing is done by for-profit organisations that pursue to both increase profits as well as raise awareness about a social cause.

According to the latest research, millennials are more willing to purchase if your company supports some type of cause.

The best example of Cause Marketing is Tata Tea’s “JAGO RE” campaign.

This campaign was for the country’s citizenry to vote as well as elect their leaders who would be accountable to them in the process of governance.

• SOCIAL MEDIA

Millennials and social media addiction, still a better love story than twilight. A brand can use this addiction to attract millennials through social media.

We know social media marketing to millennials and Gen Z is not an easy task

Millennials and Gen Z use smartphones day and night, it is no surprise they are the people who have the most social media accounts than any other age group

According to a research, the top application used by millennial and Gen z on a smartphone is Facebook, followed by Instagram.

It has been observed that the brands which use social media find it easier to interact with millennials; this also helps the brand to gain popularity among them.

It is also seen that millennials and Gen Z are more likely to become a customer of a brand that interacts with them on social media.

According to a study, social media impacts the decision-making process of millennials because it raises their awareness about the current trends.

• CO-CREATION

 In our society, companies usually create products and hope that their target market will consume them.

That’s not the case with Millennials and Gen Z. 

We are sure you would be asking these questions to yourself: How to engage customers for co-creation?

The answer to this question is social recognition and financial rewards.

Who doesn’t want social recognition, right?

Firms should take advantage of this and use customers to contribute to novel ideas.

The best example one can get is of LEGO.

Every one of us knows about LEGO, the company started a platform called “Lego ideas” which gave its customers the power to suggest the design of its next product.

Since then, the crowdsourcing platform has received suggestions from over 1 million people.

The idea which gets the maximum vote by the fans is then selected by the company itself.

In return, the creator of the winning idea is given the power to approve the end product and their name is recognized on all the packages. Even they earn a percentage of product sales as an incentive.

In a nutshell, it would safe to say that if the companies have to make a significant impact to their bottom lines then they just can’t ignore the Millennials and Gen Z.

And to be ahead of the pack the communication strategy of the brands needs to evolve so that advertisements don’t look like advertisements, they should be disguised as some value adders to those who are targeted because Millennials and Gen Z are smart.

Aren’t we?

Published by:

Vicky Kumar Sen
Vicky Kumar Sen is currently a senior digital marketing intern at Marketing Lake and pursuing PGDM from Dr D Y Patil B-School, Pune. He is very enthusiastic to become a professional digital marketer.

Ayush Verma
Ayush Verma is currently a digital marketing intern at Marketing Lake and pursuing his undergraduate degree from Dr D Y Patil Global Business School And Research Centre, Pune. He is highly motivated to improve his skills and grow professionally.

Branding has become crucial these days. As more and more startups come into existence an effective branding strategy is becoming more important than ever.

It took us a long time to give an appropriate name to our page (Marketing Lake).

Just for the record, our page is about marketing in general and digital marketing in particular. Marketing lake team posts content in the form of illustrated pictures to comprehend the concepts easily.

We relied on my some primary and secondary research to arrive at a suitable name; we have mentioned a couple of important points which you might also want to look at before selecting an appropriate brand name.

The pointers which could be helpful in your branding strategy are:

1. The brand’s name should not have any negative connotations.

2. The name should be industry appropriate. It should resonate with the kind of industry you work in.

3. The name should be easy to spell and pronounce.

4. The brand name should be legally available so that it don’t land in any sort of legal trouble.

5. The brand name should be unique and memorable, a unique name would increase the recall in the minds of the customers.

6. The name should be short so that it is easy for people to remember and associate it easily with something meaningful.

Many branding experts

7. The name should sound pleasing which would increase the frequency of it getting used very often.

8. The brand name should not limit the company’s future expansion opportunities. The expansion could be in new geographies or in some new product lines.

This pointer could prove valuable in the long run to those startups whose branding strategy is in the nascent phase.

With all the pointers mentioned above, there is something which also deserves attention apart from a perfect branding strategy, and it is brand promotions.

Do you agree?

What other points would you like to add?

Zoom has announced that it is coming to Facebook portal, Google Nest Hub Max, and Amazon Echo Show by the end of this year.

This major move, apart from helping its user base and Zoom, would help the giants (Google, Fb, and Amazon) as well, as they always relied on their in-house video chatting technology.

But now they would get to use Zoom’s video conferencing technology as well which could help them make a mark in the video conferencing solution industry.

How do you think this move will shape the video conferencing industry?                      

I find this pricing structure funny!

Have you come across this thought while buying something online?

The perception of price unfairness may come in picture when the price offered differs drastically from the perceived value of the product/services received. 

These days it has become necessary for digital marketers to price their products/services appropriately.

And to get the pricing strategy right, it’s pivotal to understand customer’s psyche and what makes them feel disappointed when you mess up on the pricing front. 

There are multiple factors which may influence price unfairness perceptions, some of them are:

• A high degree of similarity (similarity in terms of the products/services received) between different transactions with different customers at different prices can instil a feeling of price unfairness
• Customers perceive the price to be unfair when they believe that the prices were set higher due to a scarcity of the product, without any substantial changes in the costs incurred 
• Price unfairness perception could be high when the customers are buying your digital products for the first time. A customer who had purchased earlier from you may assume that the price increase would be justified even when they don’t know the reason for a price increase.
• Consumers also rely on their general knowledge about the market. This knowledge comes from experience by understanding the cost-profit relationships of the products/services advertised, a pricing structure which is abnormal as per the exchange norms can be adjudged to be unfair if the quality of the product/services received can’t justify it.

What other factors can you think of which influence your price unfairness perceptions?

Check out the post covered by Marketing Weekly to know about different types of psychological pricing.

Can a bad product be sustained by a good promotion strategy?

Communicating in a crisis!

Reading Time: < 1 minuteExtra knowledge of a brand or a product (could be through live events as well) and exclusivity of them is good enough to make you all protective about them and associate yourself with a cult.

What do you think?

Reading Time: 2 minutesDo you find advertisements these days very mundane and unevolved?

Well, not all of them are uninteresting: some of them are already cutting through the digital noise.

The other day I was looking for a word on Merriam Webster’s dictionary app; I came across an advertisement (screenshots attached) which left a lasting impact on me.

The advertisement by @Jabong asked me to tilt my screen to reveal the banner ad. This is taken care of by the built-in accelerometers (detect movements) in our smartphones. These are called Tilt Banners.

Creative, right?

Taking cues from it, I too thought about how this technology could be leveraged in other campaigns (drawings attached).

Instant Coffee campaigns, Instant Drink Mix campaigns, Tea campaigns, etc. The possibilities are endless.

What do you think could be the other ways in which new technologies could be exploited in advertising?

P. S. I wasn’t looking for the word ‘waffle’, it’s just an example :p

#Marketing #creativity #cartoons #management #campaigns #digitalmarketing #advertisement #business #onlinecampaigns