Boston Matrix

Question 1

What is Boston Matrix?

Answer 1

Businesses can analyse their product portfolio using a Boston matrix.

Question 2

What is market share?

Answer 2

The percentage of sales in the market a product makes.

Question 3

What is market growth?

Answer 3

The overall potential for sales that the market has a whole.

Question 4

What is a star?

Answer 4

Products that have a high market share in a high-growth market, e.g Apple’s iPad.

Question 5

What is a impact of a star?

Answer 5

• Stars need constant investment in marketing to keep ahead in a competitive market.
• Stars allows a business to be a market leader.
• Over time, stars will decline into either question marks or cash cows.

Question 6

What is a cash cow?

Answer 6

Products that have a high market share of a low-growth market, e.g Microsoft’s Office software.

Question 7

What is a impact of a cash cow?

Answer 7

• Cash cows should require little marketing expenses due to lack of competition.
• Funds generated can be used to further strengthens stars and improve riskier ventures, such as question marks.

Question 8

What is a question mark/problem children?

Question 9

What is a impact of question marks/problem children?

Question 10

What is dogs?

Question 11

What is an impact of dogs?

Question 12

What are advantages of product portfolio?

Answer 12

• Businesses can spread risk over different markets.
• A business can meet the needs of different market segments and appeal to more customers.
• Newer products can replace those at the end of their life cycle.
• A range of products increases the awareness of the brand as a whole.
• A business will find it easier to launch new products with a large existing portfolio.
• Cash cows can fund other, riskier, ventures such as the marketing of stars.
• Stars allows a business to be market leader in one area which will improve the brand image overall.
• Question marks products give businesses an opportunity to invest and grow.
• Dogs can be divested to reduce losses.

Question 13

What are disadvantages of product portfolio?

Answer 13

• There are high costs involved in researching and developing so many products.
• High marketing costs are incurred to promote so many products.
• Bad publicity surrounding one product may affect the whole portfolio.
• Resources assigned to new products may affect the performance of existing products.
• Dogs can drain a business of profits unless they are divested.