The Boston Matrix
Exam Board Links
AQA A-Level Business
Unit 3 - Decision making to improve marketing performance
Chapter 10 - Making marketing decisions: using the marketing mix
Edexcel A-Level Business
Theme 1 - Marketing and people
Unit 13 - Marketing strategy
What is The Boston Matrix?
The Boston Matrix is a tool used by businesses to analyse their products. It helps them understand which products are doing well, which ones need more attention, and which ones they might want to stop selling. Once they know this information, it helps them to decide on which products to invest in or not.
The Boston Matrix Diagram
How do businesses use The Boston Matrix?
Step 1:
List all the products or services the business offers.
Step 2:
Calculate the market share of each product or service.
Step 3:
Calculate the market growth rate of each product or service.
Step 4:
Plot each product or service on the matrix based on its market share and growth rate.
The Boston Matrix Explained
Stars:
High market share, high market growth. These products are leaders in a growing market and require significant investment to maintain their position.
Cash Cows:
High market share, low market growth. These are mature, established products that generate significant cash flow. They require minimal investment to maintain their market position.
Question Marks:
Low market share, high market growth. These products have the potential for significant growth but require substantial investment to increase market share. Will the risk of such investment reward the business?
Dogs:
Low market share, low market growth. These products are declining and generate little cash flow. They may be considered for divestment or harvesting. Will discounting these products affect the few loyal customers who buy it?
Example of The Boston Matrix in Practice
Stars:
The iPhone continues to innovate and generate significant revenue. Its high market share and growth potential make it a prime example of a star product. Despite the significant revenue, continuous reinvestment in product development and promotion is essential to maintain such a position, otherwise it could become a dog.
Cash Cows:
While the iPad market may not be growing as rapidly as it once was, it still holds a significant market share and generates substantial revenue, especially in education and professional settings. This revenue generated not only covers the costs of producing the iPads, but facilitates investment in stars and question marks.
Question Marks:
While the Apple Watch has gained significant traction, the smartwatch market is still emerging. Its potential for growth is high, but it requires continued innovation and marketing efforts to solidify its position. As a relatively new product, Apple Vision Pro represents a high-risk, high-reward venture. Its success will depend on consumer adoption and the development of compelling use cases.
Dogs:
As newer iPhone/iPad/iMacs models are released, older models may see declining sales and market share. While they might still generate some revenue, they may be considered for phase-out or significant price reductions, and stop production. iPods are a prime example of products becoming dogs fairly quickly, and completely obsolete as technology is music streaming evolved.
Advantages of The Boston Matrix
Encourages innovation
Develop or maintain competitive advantage for unique products/services.
Attract/retain customers, supporting sales growth.
Potentially increase market share if sales growth is faster than the market growth rate.
Effective allocation of resources
Reduce costs associated with poor performing products/services
Potential increases gross profits if it's not invested or allows for an increase investment into high-potential products/services.
With a larger investment into high-potential products, the potential to collect the right market research, develop the right prototypes, and launch the right product increases.
Disadvantages of The Boston Matrix
Oversimplification
Potentially make the wrong decision due to excluding other information.
Resources are allocated to incorrect products.
May not support the business to achieve sales / market share growth.
Difficult to measure i.e., data availability, data quality, market changes.
Inefficient resource allocation e.g., increasing production.
Could lead to excess stock in warehouses.
Increase warehousing costs and reduce operational profits.
Is it a good idea to use The Boston Matrix?
1
Ultimately, it depends on whether the risks of using it are mitigated with other tools such as a SWOT, PESTLE, Porter's 5 Forces, as well as other market data, including competition.
2
Ultimately, it depends whether the data collected for market share and market growth rates are accurate or not, or at least, steps are taken to mitigate the risks e.g., competent, skilled employee.
3
Ultimately, it depends on whether the business has a range products/services to plot across the model, and has the resources to implement any conclusions from the model.
Past Paper Questions on The Boston Matrix
Edexcel A-Level Business
A-Level Paper 1 - November 2021 - Question 1d
Bon Bon’s has identified ‘Traffic Light Lollies’ as being a ‘dog’ in its product portfolio. Assess the possible consequences for Bon Bon’s continuing to sell ‘Traffic Light Lollies’. [12 marks]
AS-Level Paper 1 - May 2019 - Question 2d
Explain how Beaverbrooks could use the Boston matrix. [4 marks]
AQA A-Level Business
A-Level Paper 1 - June 2022 - Question 22
To what extent might the use of the Boston Matrix enable a multi-product business to achieve overall sales growth? [25 marks]
A-Level Paper 2 - June 2021 - Question 2.4
Should businesses always stop the production of products classified as ‘dogs’ in the Boston Matrix? Justify your view. [16 marks]
Free Worksheets for The Boston Matrix
Worksheet
This worksheet intends to consolidate your knowledge and understanding of The Boston Matrix. From improving your visual memory of the diagram to practising how to categorise products based on data.
Knowledge File
This document contains questions with answers to explain The Boston Matrix. It's recommended that you read through it, then write a paragraph of 6 to 8 sentences summarising all the key points.