The Boston Matrix

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The Boston Matrix
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• The Boston Matrix is designed to show two aspects
  of marketing
• how a firms products are performing (how much
  market share they have)
• and how fast is the markets total sales
  increasing (fast growth, slow growth)
• Combining these two we can have four situations
  for the firms products
• High market share in a high growth market
• Low market share in a high growth market
• High market share in a low growth market
• Low market share in a low growth market
• Each of these categories of product was given a
  name these are shown on the next slide.

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Boston matrix
High---------------------------Market
growth--------------------------Low
High Market Share Low
Cash Cow
Star
Problem Child or ?
Dog
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Star
Market Growth - high
Market Share - high
Stars (high growth, high market share) Can use
large amounts of cash (marketing , pricing
discounts) and are market leaders in the business
so they should also generate large amounts of
cash. Can be highly profitable especially if
product has USP. Even if costs revenue,
marketing and product development strategies
should be used to hold market share. If
successful, as the market matures the product can
become a highly profitable cash cow.
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Cash Cow
Market Growth - Low
Cash Cows (low growth, high market share) Cash
cows dominate a mature market where the product
is likely to have an established identity and
brand name. coco-cola, mars, walkers crisps.
With a cash cow profits are likely to be high
and cash flow will be positive. Cash cows will
be the company asset that generates profits that
allow investment in and the development of new
products
Market Share - high
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Dog

• Dogs (low growth, low market share)
• Dogs can be profitable products, costs of
  development are likely to have been paid back
  well in the past, marketing costs can be low.
• Firms should, when determining strategy for this
  type of product -
• minimize the number of dogs in a company - they
  are unlikely to have long term futures- look at
  gaining positive cash flow, if not sell on-
  target niche markets
• consider if product is still part of firms
  product portfolio that customer expects to find.

Market Share - Low
Market Growth - Low
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Problem Child or ?
Problem child ( high growth, low market
share)This type of product has the worst cash
flow of any of the 4 product types - high cash
demands on marketing and repayment on R and D and
low income due to low market shareIf nothing is
done to change the market share, problem children
will simply absorb great amounts of cash and
later, as the growth stops become a dog.Firms
could either invest heavily in a re-launch of
product to increase market share (could be
worthwhile in a fast growing market) or invest
nothing and generate whatever cash it can to
minimise losses.
Market Share - Low
Market Growth - High
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• Using the Boston Matrix can help management-
• see if product mix described by the Boston Matrix
  fits in with business objectives
• target investment at those product likely to
  produce long term returns
• encourage continued production even if market is
  mature or shrinking
• help a firm develop relevant marketing strategies
• help management decide on investment decisions
• see if a product is worth re-launching