Chapter 9B: Marketing objectives and strategy

Boston matrix

2×2 matrix model ➡ analyzes product portfolio ➡ according to growth rate of market + relative market share of products ➡ within the market

Boston matrix diagram

Question marks

• Known as ‘problem child’

• Low market share

• Fast growing market

• Profits may be low — weak market share

• Can turn into a star

• Investment can achieve increased sales

Stars

• High market growth

• High market share

• Fast growing market

• High profits

• Business needs to invest ➡ to keep sales and profits high

• Net cash flow = profits = investment in product and promotion

Cash cows

• Low market growth

• High market share

• Slow growing market ➡ saturation

• Strong positive cash flow

Dogs

• Low market share

• Low market growth

• Poor sales

• Poor profits

• May earn some profit with investment

• Net cash flow ➡ zero or negative

Disadvantages of Boston matrix

• Snapshot of current position

• Little or no predictive value

• Focus on market share + market growth ➡ ignores issues ➡ e.g. developing sustainable competitive advantages