3.3.4 Boston Matrix

Question 1

what is it used for?

Answer 1

a technique to analyse a business’ product portfolio (range of products and brands).
It considers each product within the portfolio in relation to its market share and rate of market growth.

Question 2

High market growth, Low market share

Answer 2

Problem child

Question 3

High market growth, High market share

Answer 3

Rising star

Question 4

Low market growth, High market share

Answer 4

Cash cow

Question 5

Low market growth, Low market share

Answer 5

Dog

Question 6

Cash cows

Answer 6

Established products, profits from these products can be used to finance other products like rising stars.
Firms want to establish as many cash cows as possible.
Low market growth=less competition from firms entering market (less spent on advertising).
Firm can ‘milk’ the product to finance other areas of the business.

Question 7

Rising stars

Answer 7

These products enjoy increasing revenue.
As market is growing, other firms entering market with similar products, so less fierce competition between these firms.
Heavy promotional spending & increased capital investment to increase capacity.
Cash flow can be negative at first.
Often funded from cash cows.
Hoped that they can become cash cows, many eventually become dogs.
Need USP.

Question 8

Problem child (question mark)

Answer 8

With growth in market product can be successful if there is enough demand.
Some products unsuccessful and firm has to decide to persevere with or discontinue product.
Require attention, particularly in form of marketing.
Can eventually become cash cows.
High failure rate
Expensive
Opportunity cost

Question 9

Dogs

Answer 9

Unlikely to be kept on.
Little growth in market and little market share company might see little scope for future profits.
Some products may still be profitable, just in a different market.
Underperforming.
Some companies don’t have dogs (eg Apple) as they kill off old products.