The Boston Consulting Group (BCG) in the 1970's developed the BCG Matrix, The goal of this Matrix in a banking and financial service perspective would be to help them analyse the services and products that they provide, where each are placed within the Matrix and evaluate whether their products compare against the growth rate. This in turn helps the business assess whether they are meeting their ‘growth' targets. The BCG Matrix consists of four quadrants these are titled; Star, Problem Child, Cash Cow and Dog. “The chart plots market share (on the x-axis) against growth rate (on the y-axis)”. (financial- financial-dictionary, 2018).
Stars in the BCG Matrix are the best types of products a bank or financial service could have/own/use. However, they still need support in the promotion in selling the products well. These are products which have hold a high market share and are consistent in performing at a high market growth rate but are still dependent on the bank using the correct marketing approach and placement techniques. An example of a star in the banking sector is the use of banking apps they have great potential and are becoming more popular being seen as an expectation rather than ‘extra'. (Deloitte,2010), stated “Mobile banking is on the cusp of transformation from a niche service”. Banking apps are widely used by virtually all segments providing the ability and convenience of transferring money, checking statements and setting up direct debits. Stars were used by Mr Henderson, the cofounder of the BCG matrix to help demonstrate the idea “that investment into market share during growing phase could be very attractive if you had money”. (www.bcg.com, online).
A problem child is a difficult category to manage, these are generally products which a bank or financial provider would provide “that have a low share of the market but exists in markets that are growing quickly”( ifs School of Finance 2012 ). A prime example being Islamic Mortgages which acknowledge Sharia law. These are slightly altered mortgages which meet the requirements of the Islamic consumers which in retrospect to other products are scarce however more and more people are using them once finding a financial service whom provide these.
A cash cow is considered to be products which have a high market share in a low or no growth industry. These are seen as ideal products because they do well even if the market isn't very strong. Some examples of cash cows in a bank are; credit cards, and current accounts, these both create revenue/profit for a bank, this is through interest rates and the ability for the bank to provide/store cash for their consumers. Credit cards also vary in popularity ranging from those who are dependent on them and those who only use them when travelling abroad for the insurance (FSCS) stability factor.
Lastly are dogs, these are products which have a low market share in a low market growth industry only way to improve sales is to entice customers from other competitors. An example of these in a financial industry would be bank branches and check books. Check books have become less popular due to the convenience of internet banking and banking apps and the long waiting period that comes with making a payment through this method. This would be classed as a dog due to them being an expensive cost to produce with a low return and a market which is not as fond of them due to the change in demand.
(B) One of the dog products in the banking industry as stated above being check books and bank branches are difficult products banks are now left to improve due to them diminishing in value and practicality. Turning a dog into a star is risky, this generally involves careful planning and money to invest into the product to re-brand or improve.
Branches are not meeting all of their consumer's needs, although they offer a service where people can find out more information regarding other products used but also provide the opportunity to sell other products such as deposit boxes and the use of online applications, part of the issue is due to their business hours, this leaves a vast majority of consumers frustrated due to them working during the opening hours. To improve this bank could offer availability in their branches at the weekends, making them look more appealing and practical to their consumers. Branches could also offer promotional periods where they supply complimentary hot drinks and treats to their customers who walk in and use their facilities making them more popular and ‘user friendly'.
Secondly are check books which are becoming useless as consumers turn to the convenience and ease of technology. Customers are now demanding accessibility at a touch of a button. Check books could be improved by making them electronic rather than solely paper-based. This means that people would be able to use online signatures for large withdrawals rather than needing to walk into the bank's branch. The other issue is the lack of promoting the banks fail to do when speaking of check books. There are many benefits such as saving money of online processing fee's, it eliminates the fear of online hackers as well as creates an easy to follow paper trail. Many of these perks are forgotten by those who would rather put the control of the payments to a computer.
To quantify whether the initiatives have succeeded the bank would use quantitative and qualitative research to gain valuable feedback. This could be through questionnaires when clients walk into the branches or a return slip when receiving their new check book. This would be a way in which the bank can assess if they should remove a product entirely. The key areas which would be fixed on consists of customer satisfaction, the amount of growth in the product and the amount of profit earned.
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