ADL MATRIX FINAL: Strategies tool for marketers
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The Arthur D. Little (ADL) Matrix, created in the late 1970s, is a strategic analysis tool used for evaluating a company's product portfolio based on competitive position and industry life cycle stages. It consists of a 5x4 matrix assessing industry maturity—ranging from embryonic to decline—and competitive standings from dominant to weak. The ADL Matrix aids in business level portfolio analysis by identifying strategic business units' (SBUs) positions and offers flexibility, though it may suffer from a lack of focus on external threats.
ADL MATRIX FINAL: Strategies tool for marketers
- 1. Arthur D Little MATRIX
- 2. ADL MATRIX Developed in the late 1970’s by the Arthur D Little consultancy company, based in Boston and founded by Arthur Dehon Little. ADL matrix, abbreviated for Arthur D. Little Matrix is a model of strategic analysis of product portfolio. It is 5 x 4 matrix, based on two performance indicators: Competitive Position – How strong is strategic position?, based on five positions Industry Life cycle stage/ Industry Maturity – At what stage of its lifecycle is the strategic business unit of the industry. This has four stages
- 3. Industry life cycle stages are four – Embryonic, Growth, Maturity and Decline Competitive positions are five – Dominant, Strong, Favorable,Tenable andWeak Let us first review the product life cycle…..
- 5. Introduction Stage of the PLC Sales Costs Profits Marketing Objectives Product Price Low sales High cost per customer Negative Create product awareness and trial Offer a basic product Use cost-plus Distribution Build selective distribution Advertising Build product awareness among early adopters and dealers
- 6. Growth Stage of the PLC Sales Costs Profits Marketing Objectives Product Price Rapidly rising sales Average cost per customer Rising profits Maximize market share Offer product extensions, service, warranty Price to penetrate market Distribution Build intensive distribution Advertising Build awareness and interest in the mass market
- 7. Maturity Stage of the PLC Sales Costs Profits Marketing Objectives Product Price Peak sales Low cost per customer High profits Maximize profit while defending market share Diversify brand and models Price to match or beat competitors Distribution Build more intensive distribution Advertising Stress brand differences and benefits
- 8. Decline Stage of the PLC Sales Costs Profits Marketing Objectives Product Price Declining sales Low cost per customer Declining profits Reduce expenditure and milk the brand Phase out weak items Cut price Distribution Go selective: phase out unprofitable outlets Advertising Reduce to level needed to retain hard-core loyal customers
- 9. The Industry Stages The industry maturity is based on the assessment of the following criteria: Embryonic: Introduction stage characterized by rapid market growth and very little competition. Example: Online Education in India Byju’s, Khan academy, Udemy, Jigsaw Growth: Market continues to strengthen and sales increase. Example: Online Retailing Leaders like Amazon, Flipkart, small players also entering
- 10. Mature: Market is stable, there is a well established customer base and a lot of competition. Example: Groceries, laundry detergents Aging: Demand decreases and companies start to abandoning the market. Example: OvalTvs, brick and mortar stores, 2G phones, Radios
- 11. The Competitive Position Dominant: (MicrosoftWindows) Comparatively rare Typically short-lived In many cases is either to a monopoly or a strong and protected technology leadership Strong: (Apple’s iPad products) Market share is strong and stable, regardless of competitors. The firm has a considerable degree of freedom over its choice of strategies, irrespective of market position.
- 12. Favorable: (Jio,Airtel,VI) Business line enjoys competitive advantages in certain segments of market. Many rivals, and no clear leader Tenable: Position in overall market is small or niche, Can be geographical or defined by product. Competitors are getting stronger. Weak: Continuous loss of market share. Business line is too small to maintain profitability.
- 17. Steps in ADL MATRIX Four steps in creating ADL Matrix for business level portfolio analysis: Identify the SBUs of the company . Identifying phases of industrial maturity for each SBU Determine SBUs competitive position Locate the position of SBUs on ADL Matrix. Viz. the stage of its industry.
- 18. Advantages Enables product and service re-balancing Flexible to different products and service industries Useful for assessing business mix especially in era of digital disruptions
- 19. Disadvantages Not focused enough on external competitive threats Lots of subjectivity in the application of the criteria
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