A4 Boston Matrix
The Boston Matrix is a model that businesses can use to analyse their product portfolio and make decisions on investment, promotion and withdrawal of products. The aim is to achieve a well balanced portfolio of products. To use this model, products are categorised on their market share and the growth of the market.
Question marks have a low market share in high growth markets. High growth markets have a lot of potential customers but having a low market share means the business is small compared to competition. Larger competitors may have a stronger brand image, more money for investment and benefit from economies of scale. As there is a high risk that these products may not be successful, managers need to consider whether they are worth the large investment necessary to grow them.
Rising stars are products in high growth markets with a relatively high market share. They are strong compared to competition. Sales will be high, but costs will also be high at this stage due to the large investment required to maintain their market position. If they can maintain their market position when market growth slows down, they can become cash cows.
Cash cows have a high market share in low growth markets. Cash cow products are more mature, are well known to consumers, have a high level of sales compared to rivals and as a result require little investment in marketing and R&D. Cash cow products are profitable and profits can be reinvested into developing question mark and rising star products.
Dogs have a low market share in low growth markets. There is little potential for dogs so managers should consider removing them from the market. If there is remaining stock, they may want to try using sales promotions to clear it. There may be options to reposition the product into a growing market, but it is more likely that investment in a new product will have more success.
