42. boston matrix

What does the Boston matrix structure look like

What are the four categories of the Boston matrix structure

Stars - high market share and high market growth rate

Question marks (problem child) - low market share and high market growth rate Question marks

Cash cows- low market growth rate and high market share

Dogs- low market growth rate and low relative market share

What is market growth

How fast is the market for the product growing

Market may be growing or declining

Sales of a product in a fast growing market have a better chance of growing than in a stagnant or declining market

What is relative market share

To measure this the market share of a product is compared with the strongest rival product

How strong is the product in the market?

Is it the market leader?

Characteristics of stars

• immature market, new customers and lots of competition

• High revenue but high costs

• Advertisement is high

• Try to turn into cash cows

• E.g. new iPhones

Characteristics of question marks (problem child)

• bad for the marketing department

• Products aren’t selling but the market is growing

• Can improve through a relaunch

• E.g. apple homepod

Characteristics of cash cows

• profitable wit low marketing costs

• Customers know the product

• E.g. cornflakes, dairy milk and MacBook

Characteristics of dogs

• mature market

• Shouldn’t redevelop

• Takes up management time

• Can keep as initial product development if already done

• E.g. Apple TV

Benefits of the Boston matrix

• judge how to mange individual products and the product range given market conditions

• Recognise importable of having successful, profitable products to fund development of stars and cash cows

• See whether they have products in fast growing and potentially profitable market sectors

Limitations of the Boston matrix

• high market share is not only success factor

• Can cause a business to focus too much on increasing market share

• Fails to take into account how a business’s products complement or have synergy with each other

When is a Boston matrix most useful

• firms that have many products

• Considering the whole market and not just one product

• Consider the whole product portfolio rather than an individual product line

• When used alongside the product life cycle