| The Boston Matrix
The Boston Matrix is a method of product portfolio analysis devised by the Boston Consultancy Group. The matrix is shown below and is split up into 4 segments.
Products that have a low market share in a slow growing market are called Dogs; the product is unsuccessful in the market which isn't growing quickly. It is rather pointless trying to invest in this product as it would be expensive, it is best to 'put the dog down' get rid of it if it isn't profitable. If it is profitable it could be kept and the little profits that it produces could be spent elsewhere or the product could be sold on to another firm who may wish to invest in it.
Problem Children is a product which has relatively low market share in a fast growing market. It is difficult to know what to do with problem children; the product could be left as it is with the hope that its market share increases, investment could be undertaken to try and increase the market share, or the product could be dropped altogether.
Star products are ones which have a large market share in a fast growing market. Stars are often in the growth phase of the product life cycle and the reason they usually have large market share is because the firm is spending a lot of money on advertising and promotion, it may also have to invest heavily in buying capital to produce the product.
Cash Cows are products with a high market share in a steady market, this is usually the maturity phase of the product life cycle. This means that sales of the product are unlikely to grow in the future but the cash cow product usually fosters large profits for a company. It can use these profits to produce and invest in new products ideally ones which are located within in the Star segment.
Page last updated on 20/10/13
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