3.4c Product - Boston Matrix Flashcards Preview

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Flashcards in 3.4c Product - Boston Matrix Deck (14):

Product portfolio definition

Range of products or brands provided by a business


Boston matrix definition

Tool of portfolio analysis that classifies products according to the market share of the product and the rate of growth of the market
(See diagram)


Four categories in Boston Matrix

- Stars
- Question marks
- Cash cows
- Dogs


Stars features

- High share of a rapidly growing market
- Requires high marketing spending
- Net cash flow is neutral or at best modestly positive


Strategy for stars

- Invest to sustain growth
- Build sales
- Spend to keep competitors at bay


Cash cows features

- High share of a slowly growing market
- Mature stage of product life cycle
- Dominant share but little potential for growth
- Large positive cash flow - can support other products


Strategy for cash cows

- Defend market share
- Aim for short term profits
- Little need for investments
- Use profits from cash cows to invest in new products


Question marks features

- Low share of a rapidly growing market
- Cash flow is negative
- Has potential but future is uncertain


Strategy for question marks

- Invest to increase market share
- Invest in promotion
- Build selectively


Dogs features

- Low share of a slowly growing market
- No potential
- Either products that have failed or products in decline stage


Strategy for dogs

- Phase out or sell off
- Not worth investing in
- Any profit made reinvested just to maintain market share


Disadvantages of Boston Matrix

- Only a snapshot of the current position
- Has little predictive value
- Product life cycle varies


'Apple' dogs example:

Iphone 5 is now considered vintage so they are no longer supporting it


'John Lewis' dogs example:

No longer selling DVD players as sales of product plunged by 40% over the last year following increase of services such as Netflix

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