What is Boston matrix?This witty and original way of classifying products was coined by a group of marketing experts Boston led by Bruce Henderson in the late 60s of the last century.Intuitively, they introduced this method in the form of a table of four quadrants.According to Henderson, each product or service can be attributed to one of the quadrants.The vertical axis of the table - a rate of growth of the test of the market, horizontal - the market share of the product (service).The dynamics of growth may vary depending on economic conditions and the needs of the company.
Four types of product (service)
1. Stars - products with high market share in the fast growing markets.So they bring the greatest profit, they should be protected, stored, and, of course, create new stars.
2. Difficult children - the low share of the market at high rates of market development.They consume a lot of resources and give a little.If you wish to increase the percentage of market share requires a significant financial investment.
3. Cash cows - these products are characterized by high market share and the low rate of market development.With small investment they bring maximum profit.Dairy cows should be left in the portfolio as long as the situation does not change.
4. Dogs - low proportion and low rates.It failed investments that only consume the resources of the firm.They are better than completely eliminate or at least minimize their presence in the portfolio.
Benefits
In terms of the analysis of the internal processes of the company, the Boston matrix has a number of advantages:
- gives a collective picture of the competitiveness of and demand for the company's products;
- helps in justifying different options of marketing strategies;
- focused on the end consumer, the product, production volumes and the resultant sales income;
- shows the priorities when considering different options of marketing decisions;
- is the most affordable approach to strategic analysis of the company's commodity basket.
Disadvantages
addition to the merits, the Boston matrix has disadvantages:
- it focuses on the company's leadership in its niche, or aspiring to leadership;
- Boston Matrix is focused on product strategy and financial flows of the company, although it is no less important strategy in other working areas: personnel, technology, management, etc .;
- loses its clarity when multiproduct manufacturing or requires more detailed consideration of each product category;
- from the analysis of this matrix have practical benefits, but only in terms of ascertaining the results achieved by the company.Without further investigation, it does not give a similar picture for the future.
course, the Boston Matrix is a fairly "smart" tool, but in practice it is best to take a final decision based on the results of not one but several methods of strategic analysis of the enterprise.
