The Implications of Product Classification in the Boston Matrix for the cash flow and Marketing Strategy

Question 1

Cash cow

Answer 1

Cash cows are products with a high market share in a mature market (the entire market is no longer growing)
They generate significant positive cash flow but have low growth potential
The business invests minimal resources in cash cows as they are seen as stable sources of income
Marketing efforts focus on maintaining their market share and profitability
Cash cows are valuable assets and can be used to fund the development of new products

Question 2

Problem child/ Question mark

Answer 2

Problem child or question mark products have a low market share in a high-growth market
These products have the potential to become stars if the company invests in their development
There is often a negative cash flow as businesses usually invest in problem child products to increase their market share and turn them into stars
If the investment does not result in growth the business may discontinue the product
Marketing efforts focus on increasing their market share and brand recognition

Question 3

Star

Answer 3

Star products have a high market share in a high-growth market
The company typically invests in stars to maintain or increase their market share
They generate significant positive cash flow and have the potential for continued growth
Marketing efforts focus on building brand recognition and increasing market share
Stars are valuable assets and the business should focus on maximising their potential

Question 4

Dog

Answer 4

Dog products have a low market share in a low-growth market
They generate little revenue for the company and have no growth potential
Businesses often move away (divest) from these to focus on more profitable products
Marketing efforts for dog products are minimal or zero

Question 5

hold strategies for stars

Answer 5

Allocate more resources to support further growth
Build market share through continuous investment in product development, marketing and innovation to maintain a strong market position
Capture additional market segments by expanding the product’s reach into new geographical markets

Question 6

harvest strategies for cash cows

Answer 6

Maintain market dominance by protecting existing market share through branding, quality and customer loyalty
Optimise profitability by streamlining operations, reducing costs, and maximising efficiencies to maximise profits
Extract cash flows to invest in other products or new ventures

Question 7

build strategies for question marks

Answer 7

Conduct market research and analysis to determine the potential for growth and profitability
Invest selectively and allocate resources strategically to question marks with the highest potential and withdraw resources from those with low potential
Invest in marketing, research and development to increase market share and convert them into stars

Question 8

divest startegies for dogs

Answer 8

Sell off the product or business unit if it no longer fits with the company’s overall strategy or long-term objectives
Harvest or maintain if the product can still generate some cash flows
If the product has no future prospects plan for an orderly exit from the market