Product Portfolio analysis Boston Matrix

1. Product Portfolio analysis (Boston Matrix) A product portfolio or product mix is the range of products a firm produces. A single product firm is vulnerable to external forces and needs a range of products to spread risk. Products need to be developed and firms need to have a sensible portfolio of products, which are at varying stages of the product life cycle. The Boston Matrix helps firms assess if they have a balanced product mix. E.g.: today’s cash cows are tomorrow’s dogs. Dogs need to be replaced with new products to widen the product mix. Star products have a high share of a market in the growth stage of the product life cycle. These products capital to finance the growth i.e. may mean negative cash flows but have potential for high sales and profit. Cash cows have a high market share and generally high sales revenue, cash flow and profit. However, no market growth likely. Cash cows can be used to subsidise stars. Problem Child has a low share of a market with high potential for growth and requires large injections of finance needed. They could become a star or a dog. Firms need to decide on whether or not to halt production, or sell the brand. Dogs have low share of a market in a low growth market. These products have no growth potential and any profit has to be reinvested just to maintain market share.

2. Ansoffs Matrix

3. Ansoff Matrix (1) Market penetration- involves increasing sales to present target customers. The product remains unchanged although there may be a substantial change in how the product is promoted; (2) Market development - involves identifying new segments for the current products offered by the company; (3) Product development - seeks growth by modifying existing products or introducing new products to serve existing markets; (4) Diversification - involves taking profits from existing products or businesses to acquire or enter new markets, usually in different industries from previous company efforts.