12 Apr Boston Matrix Model

The Boston Matrix Model, devised by Bruce Henderson, is a tool for assessing the market potential of products and services already in production, as well as ones in a more infant stage. Once the product or service has been defined in the table below a relevant strategy can be applied to it.

For instance, a product still at its prototype stage may be given extra resources and capital and pushed into production more quickly if it is deemed to be a ‘rising star’.

The model is certainly limited in terms of details, but it provides a quick and simple way to assess the possible future successes of a product or service. This is an excellent way to quickly communication ideas to others, but ideally further analysis will be done before a strategy is decided upon.

Cash Cow – This analogy refers to ‘milking’ the returns on previous investments. These products still need maintenance, however as growth is unlikely large investment are not required.

Dog – There is no point in developing this product as it has a low market share and its market growth has slowed down. The key to a product such as this is to identify it early and recover costs as quickly as possible.

Problem Child – Despite the huge market potential for this product, it remains with a small market share.  With the right amount of investment and innovation this product has the potential to take off, but risks wasting resources if it struggles to gain market share in an often competitive industry.

Rising Star – Good market share in a fast growing industry means likely returns are high for this product. Continued investment and innovation to remain at the top of the market is strongly encouraged for this product.

For more information on this model please visit:

http://www.businessballs.com/freebusinessplansandmarketingtemplates.htm#boston-matrix-model