boston matrix Flashcards
what is the boston matrix?
• a useful information analysis tool for allowing the firms to analyse their product mix is the product portfolio matrix developed by the Boston consulting group called the Boston matrix
• one problem for firms in planning their product mix is that it is very difficult to tell what stage of the life cycle a product is at. also there is no standard lifetime for products
what is the problem child area of the boston matrix?
• products which have future potential as they are high in growth markets but their sales are not particularly good at the moment
• low market share in an area of high market growth. the goal is to increase market share here
• product - usually a new product launched in the market
• large amounts of of investment are required and promotional support
• they are in the ‘introductory stage’ of the product lifecycle
what is the dog area of the boston matrix?
• products which are in decline
• low market share in an area of low market growth
• a business wants to avoid dogs however, technology and innovation and trends change over time
• they have poor sales and poor profits
• because they generate a negative cash flow, they will us be disposed of
what is the star area of the boston matrix?
• products with a large market share of a high growth market
• high market growth - high market share
• they have the potential to grow quickly and make money
• these are product that have successfully reached the growth stage in the life cycle. although they need ongoing promotional support they are already providing high cash returns. they present good prospects for the future
what is the cash cow area of the boston matrix?
• these products are able to generate funds possibly to support other products. these are mature products in established markets with a stable market share
• high market share in an area of low growth market. they provide excellent profits for a business however they will need ongoing marketing support and will need ‘freshening up’ from time to time employing ‘extension strategies’ to products
