Product Portfolio analysis Boston Matrix

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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. todays cash cows
  are tomorrows 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.

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Ansoffs Matrix
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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.

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Internal
External