BOSTON MATRIX INTRO Flashcards
What is product portfolio analysis
A method of systematically reviewing and evaluating the range of products a business offers.
What is the Boston matrix
A model used to analyse an organisation’s product portfolio by considering the relative market share and market growth of each product.
Easier to understand method: This is a model that examines an organisation’s product portfolio by looking at how much of the market each product controls and how quickly the market for each product is expanding.
What are the 2 categories the Boston matrix utilised to plot a product
Market Growth: The percentage increase in the size of the market in terms of either value or volume.
Formula = Change in size of market divided by original size, multiplied by 100
Market growth identifies whether a market is: Growing, Stable or Declining.
Examples of fast growing markets: Hybrid cars, and a decade ago it was a mobile phone.
Market Share: The percentage of total market sales accounted for by one business.
What is the formula for working out market share
Formula = Sales of a business divided by total market sales X 100
What is a question mark/ problem child
Question Mark / Problem Child = The market for the product or service is high (big) but the company’s market share is low. The owners need to decide what they’re going to do, are they going to keep selling and pray to grow their market share, are they going to create a new marketing strategy, or will they wimp out like bitches and quit.
What is a star product
Star product = This is a good position for a company’s product or service to be in. The market growth is high (meaning there will be more consumers to purchase) and the organisation’s market share is high (they’re taking a lot of the money in the market). Because it’s a growing market, there will be more competition making it more competitive, so the organisation will want to protect their market share. They can do that by maybe spending more on advertising to maintain or grow. They could maybe improve their product. Although this is a good position to be in, it’s fairly expensive.
What is a cash cow
Cash Cow: This is the type of market with a lot more stability. The product has probably been around for a while, considering that it has a large market share. You don’t have to spend loads of money on advertising (as the product has been well known for a while). The money you make off of the cash cow, can be used to invest into the problem child, and the star products. Basically this is a high revenue product with low costs, allowing us to invest into the problem child and the question mark (or they could invest in something else).
