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The Marketing Mix:
Product
Product Portfolio Analysis - Boston Matrix
Today you will know how the a product portfolio analysis
is.
You will understand the Boston Matrix and its use in
marketing decision making.
You will be able to apply this theory and understanding
to the ASOS.com case study.
Product Portfolio Analysis
The Boston Matrix
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Some businesses have a wide range of products that they
offer their customers. This is known as a product portfolio.
Each product has a lifespan, therefore businesses must be
aware of where all their products are in their lifespan to
manage their product portfolio.
One way a business can manage their product portfolio is to
look at a tool called the Boston Matrix.
Product Portfolio Analysis
The Boston Matrix
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The Boston Matrix is a tool that can be used to compare products of
a business and to work out how well they are doing.
The Boston Matrix considers market share and the rate of growth in
the market a product is operating in.
A product portfolio is the range of products a business may sell
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e.g. Unilever owns Slim-Fast, Birdseye, Hellmans, Dove, Comfort and many
more
As part of the planning
process a firm needs to
examine the position of
its product in the
market and this is
product portfolio
analysis.
Product Portfolio Analysis
The Boston Matrix
In the matrix are the links to the stages in the life
cycle of each type of product in the Boston matrix
Growth
Introduction
Maturity
Decline
Product Portfolio Analysis
The Boston Matrix
The Boston Matrix – Dogs
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Low market share in low growth markets
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These firms do not generate cash
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Firms may want to get rid of such products
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May be held for strategic reasons e.g. to maintain market
share
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E.g. Video recorders
Product Portfolio Analysis
The Boston Matrix
The Boston Matrix – Cash Cows
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High market share in a slow growing market
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Often mature products with well established producers
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They generate more income for the business than is invested
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Little room in market for further growth
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Much of the promotion is already done
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Good product awareness in the market for the product
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May become dogs
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Money generated from cash cows is used to fund a companies other star and
problem child products to help them succeed (milking)
E.g. Heinz Baked Beans, Nescafe Original
Product Portfolio Analysis
The Boston Matrix
The Boston Matrix – Stars
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Large share of a fast growing market
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Highly successful products which may generate high incomes
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Usually expensive to market/promote
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Money needs to be spent to ensure it retain its position in the
market, to stay ahead of competition
The aim is to develop into a cash cow
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E.g. Apple I-pod
Product Portfolio Analysis
The Boston Matrix
The Boston Matrix – Problem Child
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Small market share in a fast growing market
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Products may be a success or they may fail - very vulnerable
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Generate little income
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Products have an uncertain future
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Need large investment in marketing to create awareness and brand
image
Mostly new products onto a market
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E.g. Microsoft X-box when it was launched in 2001
Product Portfolio Analysis
The Boston Matrix
Criticisms of the Boston Matrix
•
It is over simplified model not suitable for all product types
•
Profit is not always directly related to high market share e.g.
Boeing launching a new aeroplane, it gains high market share
quickly but has large development costs to cover
•
Diverting money made from cash cow products (milking) and not
invested back into it to continue promoting may make it lose its
competitive advantage
The Product Life Cycle & The Boston Matrix
Case Study: ASOS.com
Read through the case study then complete the questions below:
1.
What is meant by the term ‘Product Lifecycle’ (2 marks)
2.
What is meant by the term ‘Product Portfolio’ (2 marks)
3.
What is meant by the term ‘Boston Matrix’ (2 marks)
4.
What is the core purpose of ASOS.com? (2 marks)
5.
Describe the marketing mix of ASOS.com. (8 marks)
6.
Draw and label the stages of the product lifecycle for
ASOS.com’s own label products. (12 marks)
7.
Analyse how the product lifecycle gives ASOS.com greater
control over their business operations. (8 marks)
8.
Describe how ASOS.com measure the effectiveness of their
promotional activities. (6 marks)
9.
Describe ASOS.com’s approach to promoting their products. (6
marks)
10.
Discuss the factors ASOS.com should consider when deciding
whether to spend more on promoting particular products? (8
marks)
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Refer to the Boston Matrix and the product lifecycle when answering this
question.
Total Marks: 56