14: Boston Matrix Flashcards
1
Q
The Boston Matrix is a method of ____________ (1)
A
- Portfolio analysis
2
Q
Portfolio analysis (4)
A
- An analysis of the market position of the firm’s existing products
- Allowing the firm to consider its exisiting position
- And plan for what to do next
- In order to develop a well balanced product portfolio
3
Q
A
4
Q
A
5
Q
Cash Cow (5)
A
- High market share
- Low growth market
- High sales, minimal investment
- Established brand loyalty
- Positive cash flow
- Which can fund investment into problem child and NPD
- Maturity phase of PLC
6
Q
Rising Star (8)
A
- High market share / High growth market
- High promotional cost
- To protect against competitors
- As firm looks to develop brand loyalty
- Cash flow starting to become positive
- As revenue rises
- Growth stage of PLC
7
Q
Problem Child/Question Mark (8)
A
- Low market share / High growth market
- High level of investment needed to promote, distribute and maintain them
- So high costs without high revenue
= Negative cash flow
- Establishing brand awareness
- Huge potential to generate profits in future, however, high risk
- Introduction phase of PLC
8
Q
Dog (3)
A
- Low market share
- Low growth market
- Decline phase of PLC
9
Q
If a firm doesn’t have many problem children, they may consider _________________
As the _______________ and ______________________
That said, _______________ as firms_____________________________ (5)
A
- Extension strategies for their dogs
- costs of NPD are very high
- New product launches have a low success rate
- extension strategies usually fail
- Cannot find a new market position for their product
10
Q
4 post-portfolio analysis strategies (4)
A
- Building
- Holding
- Milking
- Divesting
11
Q
Building (2)
A
- Investing in promotion and distribution to boost sales and market share
- Often used with problem children
12
Q
Holding (2)
A
- Marketing spending to maintain sales
- Used with rising star products
13
Q
Milking (2)
A
- Milking the profits
- Without much new investment
- Used with cash cows
14
Q
Divesting (2)
A
- Selling off the product
- Common with dogs/problem children
15
Q
Advantages of Boston Matrix (4)
A
- Clear picture of product portfolio, shows if it is balanced or not
- So valuable in planning future budgets
- I.e. should more money go into marketing or NPD
- Very simple to use tool so can be understood by all employees
16
Q
Disadvantages of Boston Matrix (5)
A
- Opinion based, only as good as person doing it
- Confirmation bias
- So potential validity issues
- Does not account for external factors
- Such as new technology, consumer incomes, competition etc…
