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: the Boston matrix
The classification of products in the Boston Matrix 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 Boston Matrix, Cash Flow and Marketing Strategy
Product Type
Explanation
Implications
Cash Cow
Cash cows are products with a high market share in a mature market (the entire market is no longer growing)
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
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
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
Star
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
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
Dog
Dog products have a low market share in a low-growth market
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
Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.
