The Boston Matrix
Learn how to use the Boston Matrix, in this short video.
Imagine you're reviewing your organization's products, and you need to decide which ones you should invest in over the next year.
This might sound fairly straightforward at first. But once you start looking at the details, it gets more complex.
For instance, one of your products isn't making any profit at all. But you think it's really going to take off in the next year or so.
Another product is selling really well right now. But the market is declining. A year from now, it could be a big cash drain on your organization.
So which of these products should you invest in? The Boston Matrix helps you figure this out. With it, you plot products into one of four quadrants, depending on their market share and their market growth.
Market share is the percentage of the market your product serves. And market growth is how fast that market is growing.
The four quadrants in the matrix are Dogs, Cash Cows, Stars, and Question Marks.
Dogs are products that have low market share, and low market growth. These products don't make much profit, but they also don't need a lot of investment, either.
Cash Cows are popular with customers. They have high market share, but low market growth, so you should avoid investing too much here.
Stars are just that – they have high market share and high market growth, so they're on their way up.
The last category in the matrix is Question Marks. These products don't have a significant market share. So, they're not generating much profit. However, they're also in a high growth market, which means they could become Stars or Cash Cows with just a bit more investment.
Now, read the article that accompanies this video to find out more about the Boston Matrix – including what strategies to use with your Dogs, Cash Cows, Stars, and Question Marks.