- The Boston Consulting Group (BCG) Matrix is a tool used by businesses to analyse their product portfolio and make strategic decisions about each product
- The matrix classifies products into four categories based on their market share and the market growth rate
- Cash Cow
- Problem Child/Question Mark
- Star
- Dog
Diagram of the Boston Consulting Group Matrix
Products in the Boston Matrix are classified according to their market share and the growth rate in the market as a whole
- By categorising products into these categories, businesses can allocate resources more effectively, optimise their cash flow and develop marketing strategies that align with the product's potential
The Implications of the Boston Matrix for the Cash-flow and Marketing Strategy
Product Type
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Explanation
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Implications
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Cash Cow
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- Cash cows are products with a high market share in a mature market (the entire market is no longer growing)
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- They generate significant positive cash flow but have low growth potential
- The business invests minimal resources in cash cows as they are seen as stable sources of income
- Marketing efforts focus on maintaining their market share and profitability
- Cash cows are valuable assets and can be used to fund the development of new products
|
|
Problem Child/Question Mark
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- Problem child or question mark products have a low market share in a high-growth market
- These products have the potential to become stars if the company invests in their development
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- There is often a negative cash flow as businesses usually invest in problem child products to increase their market share and turn them into stars
- If the investment does not result in growing the business may discontinue the product
- Marketing efforts focus on increasing their market share and brand recognition
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|
Star
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- Star products have a high market share in a high-growth market
- The company typically invests in stars to maintain or increase their market share
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- They generate significant positive cash flow and have the potential for continued growth
- Marketing efforts focus on building brand recognition, increasing market share, and maintaining profitability
- Stars are valuable assets and the business should focus on maximising their potential
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Dog
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- Dog products have a low market share in a low-growth market
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- They generate little revenue for the company and have no growth potential
- Businesses often move away (divest) from these to focus on more profitable products
- Marketing efforts for dog products are minimal or zero
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