Derrick’s Ice-Cream Company: applying the BCG matrix in customer pro tability analysis
M A LC O LM SM I T H *
Division of Business and Enterprise, University of South Australia and Leicester Business School, De Montfort University, UK
Received: August 2001 Revised: October 2001; June 2002 Accepted: July 2002
Abstract
This case highlights the differences in the pro tability possible when different customers are in receipt of substantially the same product. It provides the opportunity to develop a customer portfolio, along the lines of the Boston Consulting Group (BCG) portfolio matrix, as part of a customer pro tability analysis. Keywords: customer pro tability, BCG matrix, delivery policy, portfolio pro le, purchasing pattern, inventory holding
The case Derrick’s Ice-Cream Company is located in modern premises and manufactures and distributes 30 different ice-cream product lines from its suburban base in the UK. The products are distributed by Derrick’s own eet of refrigerated trucks to six major wholesale distributors. Annual sales are currently around the £10m level, distributed among the wholesalers as indicated in Table 1. Derrick’s control about 35% of its metropolitan market, but this shrinks to less than 10% in outlying areas where there are many small competitors. Derrick’s will usually hold up to four weeks of stock in their central cold stores to meet the distribution requirements of their six major customers. The cold stores cost
Table 1. Market shares for six customers Customer Ardron’s Wafers Butler Ices Cahill’s Cones Donleavy Ices England Wedges Frankston Chocs Others Total % Sales 19 12 25 9 14 20 1 100
* Address for correspondence: Professor Malcolm Smith, Division of Business and Enterprise, University of South Australia, GPO Box 2471, Adelaide SA 5001, South Australia. E-mail:
