ITPEC IP October 2025 Question 83
A middle-sized consumer electronics manufacturer company A divides the products into groups in accordance with their potential and competitive strength in order to determine the priority of investing funds among their lineup. Which of the following is the most appropriate method of analysis for this purpose?
Explanation
PPM analysis of market share and market growth rate — PPM groups products by market potential and competitive strength to set investment priorities.
Product Portfolio Management plots each product on two axes: market growth rate (the potential of its market) and relative market share (the company's competitive strength in it). The four quadrants guide where the funds go:
- •Star: high growth, high share — invest to keep the lead
- •Cash cow: low growth, high share — needs little investment and funds the others
- •Question mark (problem child): high growth, low share — invest selectively to build share
- •Dog: low growth, low share — a candidate for withdrawal
Answer (c)
Why not others:
- •(a) — cluster analysis groups items by similarity, here by price and customer base; neither measures market potential or competitive strength
- •(b) — RFM analysis ranks customers by the recency, frequency and monetary value of their purchases; it segments customers, not products
- •(d) — principal component analysis condenses many correlated variables into a few components; applied to the causes of faults it is a quality-analysis tool, not a way to prioritise investment
Key rule: When funds are allocated among products or businesses using market growth and market share, the method is PPM.
Business Strategy Management · AI-written, may contain errors
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