3.4c Product - Boston Matrix

Question 1

Product portfolio definition

Answer 1

Range of products or brands provided by a business

Question 2

Boston matrix definition

Answer 2

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)

Question 3

Four categories in Boston Matrix

Answer 3

• Stars
• Question marks
• Cash cows
• Dogs

Question 4

Stars features

Answer 4

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

Question 5

Strategy for stars

Answer 5

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

Question 6

Cash cows features

Answer 6

• 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

Question 7

Strategy for cash cows

Answer 7

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

Question 8

Question marks features

Answer 8

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

Question 9

Strategy for question marks

Answer 9

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

Question 10

Dogs features

Answer 10

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

Question 11

Strategy for dogs

Answer 11

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

Question 12

Disadvantages of Boston Matrix

Answer 12

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