One of the concepts that confuses many students is the Boston Box or the Product Portfolio or even the Boston Matrix.
As you can see what we have is 4 categories of products by market growth and market share. This is used for companies with a large portfolio of products or a wide product range.
Companies will look to see where their products would fit into these categories and then decide what to do next? Should they invest or divest?
Stars
These are products with high market share and growth. These products will be invested in more until they can hopefully turn into cash cows (which need little maintenance or tinkering). At this point though there will be a lot of investment in the product, so a positive return in terms of profit may not yet be reached.
Question Marks (also sometimes called Problem Childs)
These products have high growth but still low market share. They are unpredictable and perhaps a bit of a gamble. It is likely there will be lots of competitors in these markets, so is it worth developing the potential of these Question Marks? Ultimately some will be developed and invested in, while others will be left to die or even withdrawn. Hopefully some question marks may become stars or cash cows with the right investment and development.
Dogs
An easy decision for managers here. Low growth and low market share mean these products have to be withdrawn or discontinued and reinvest the money into something with more potential.
Cash Cows
These products have high market share but low growth. They are in a mature or saturated market. Cash Cows raise a lot of revenue for the company, often with little maintenance. They do still need to have some investment, in terms of advertising and still will need to be managed, but not to the same extent as some of the others. Money raised from cash cows will be reinvested into working out whether question marks can be turned into stars. Some stars may benefit from revenues raised from cash cows too. Sadly, if neglected, some cash cows may end up being dogs and reach the end of their product life.
The Boston Box model is simplistic and is only used to give managers an idea of where their products are in terms of growth and market share.
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