boston matrix Flashcards
why do businesses use the Boston matrix?
Businesses use the Boston matrix, which is a model that helps analyse their portfolio of businesses and brands. The Boston matrix is a popular tool used in the marketing and business strategy.
What is the Boston matrix?
A portfolio of products can be analysed using the Boston Group Consulting Matrix.
This categorises the products into one of four different areas based on;
Market share- does the product being sold have a low or high market share?
Market growth-are the numbers of potential customers in the market growing or not ?
How is the Boston Matrix constructed?
The Boston matrix makes a serious of key assumptions;
Market share can be gained by investment in marketing.
Market share gains will always generate cash surpluses. (cash surpluses means the cash exceeds the cash needed for day-to day operations)
Cash surpluses will be generated when the product is in the maturity stage of the life cycle.
The best time to build a dominant market position is during the growth phase.
What are the four categories on the Boston matrix?
Stars
Cash cow
Dogs
Question Marks
What is the star section of the Boston Matrix?
Stars are high growth products competing in markets where they are strong compared with competition.
Products in the star section often need heavy investment to sustain growth.
Eventually, growth will slow and assuming they keep their market share stars will become Cash cows. ( market share is the percentage of an industrys sales that a particular company owns.)
What is the cash cow section of the Boston matrix?
Cash cows are low growth products with a high market share. These are mature, successful products with relatively little need for investment.
Cash cow products need to be managed for continued profit- They need to be managed for continued profit- so that they generate the needed cash flow businesses need for star products.
