Teaching guide: Boston Matrix

Use this teaching guide in the classroom to engage your students, contextualise the model/theory in real-world business and prepare them for the exam.

Section 3.3.4 Making marketing decisions.

Overview

The Boston Matrix is a common method of portfolio analysis developed by the Boston Consulting Group (BCG).The product life cycle shows the sales of one product over time. However, businesses often have many products and will want to have an overview of how they are doing. Product portfolio analysis involves an assessment of the position of all of the products of a business to help with planning. This assesses how products are performing in relation to market share and market growth.

Model/theory

Dogs

Features

• Low market share.
• Low market growth.

Action

Managers may need to revive these dogs or stop producing them.

Cash cows

Features

• High market share.
• Low market growth.

Actions

• These are well established products, which mean they will be generating revenue but may not need heavy investment to promote.
• Managers may say ‘milk’ these products, ie use the money they generate to finance other products.

Problem children

Features

• Low market share.
• High market growth.

Actions

• The market is attractive as it is growing but this product is not well established.
• Managers may invest in these products to help promote and distribute them. These products may provide significant income in the future (assuming they thrive).

Stars

Features

• High market share.
• High market growth.

Actions

• These products are doing well in fast growth markets.
• They may need some investment to support them and maintain market share; these funds may come from the cash cows.

When you can use this

• Consider where the products of a multi-product business such as Unilever or Coca Cola might fit in the model.
• Consider different portfolios, eg many dogs or many cash cows or many problem children. What are the implications of this?

Where it’s been used

• Q3.2, A-level paper 3, 2017
• Q1, AS paper 1, 2018
• Q1, A-level paper 1, SAM set 2
• Q3, AS paper 1, SAM set 1