Analyse the Streingths and Weaknesses of the Boston Matrix as an Aid T Essay Example
In this essay I will look at the strengths and weaknesses of using the Boston Matrix to help make decisions in business. I will first briefly explain the Boston Matrix and then analyse its effectiveness as an aid to making a marketing strategy.
Like Ansoff's matrix, the Boston Matrix is a well known tool for marketing managers. It was developed by the large US consulting group and is a way that a business can compare all of its products. The two aspects it looks at are market share (relative to that of competitors) and market growth. To use it you would look at all of your products and sort them into 4 categories, stars (products with a high market growth and a high market share), cash cows (high market share in a market with little growth), problem children/question marks (low market share in a growing market) and dogs (low market share in a market with no growth). There needs to be an equilibrium of the different types in your product portfolio. Never have any dogs, but try and keep the same amount of the other 3 types. This means that funds can be evenly distributed between the 3, money generated from cash cows needs to be spent turning problem children into stars, which will eventually become cash cows, and the cycle continues. Some problem children will become dogs, and money from cash cows may also have to be spent compensating for these failures.
The Boston Matrix is commonly used to try and help plan the future of a company as well as simply categorising products. But it takes a good marketing team to use the Boston Matrix successfully in conjunction with the marketing mix. There are several advantages and disadvantages of using the Boston Matrix to help make decisions like this...
Firstly, there is a common assumption that a high market share will automatically mean high profitability of a product. This isn't always the case, as the costs of development of a product must be taken into consideration. For example, when Boeing launch a new jet, yes they
Like Ansoff's matrix, the Boston Matrix is a well known tool for marketing managers. It was developed by the large US consulting group and is a way that a business can compare all of its products. The two aspects it looks at are market share (relative to that of competitors) and market growth. To use it you would look at all of your products and sort them into 4 categories, stars (products with a high market growth and a high market share), cash cows (high market share in a market with little growth), problem children/question marks (low market share in a growing market) and dogs (low market share in a market with no growth). There needs to be an equilibrium of the different types in your product portfolio. Never have any dogs, but try and keep the same amount of the other 3 types. This means that funds can be evenly distributed between the 3, money generated from cash cows needs to be spent turning problem children into stars, which will eventually become cash cows, and the cycle continues. Some problem children will become dogs, and money from cash cows may also have to be spent compensating for these failures.
The Boston Matrix is commonly used to try and help plan the future of a company as well as simply categorising products. But it takes a good marketing team to use the Boston Matrix successfully in conjunction with the marketing mix. There are several advantages and disadvantages of using the Boston Matrix to help make decisions like this...
Firstly, there is a common assumption that a high market share will automatically mean high profitability of a product. This isn't always the case, as the costs of development of a product must be taken into consideration. For example, when Boeing launch a new jet, yes they