The Boston Matrix

Video Transcript

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.

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Comments (4)
  • Over a month ago Yolande wrote
    Hi Sam

    Well, then there's good motivation for your colleagues to join Mind Tools as well!

    Isn't it interesting how a tool like the Boston Matrix can change our perspective? What we think is the right and best thing to do, may not be. Instead of doing the business good, we're actually not optimizing growth opportunities.

    Maybe you could make some suggestions to your colleagues or even introduce them to the tool. It should be interesting to see how they feel about it and what the outcome is.

    Kind regards
    Yolandé
  • Over a month ago sam_dubai wrote
    Hi Everyone,

    I work with a product manufacturer and our line of products keep changing constantly somtimes without we ( sales) know why. The Boston Matrix could provide an explination to what is happening. We sales folks tend to think that if a product is selling well company should focus on this line. Well, according to Boston Matrix this isn't the case.
    Just because products sell well doesn't mean they generate good profits or they represent good potential for market growth.

    My colleagues who work on product selection could be using strategic tools like this one to determine the best product line based on many factors beyond the the sales of the products ( which of course is important!)
  • Over a month ago James wrote
    Hi Everyone

    We’ve given this popular article a review, and the updated version is now at
    http://www.mindtools.com/community/pages/article/newTED_97.php

    Discuss the article by replying to this post!

    Thanks

    James
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