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 AnalysisThe Boston Matrix • 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 AnalysisThe Boston Matrix • 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 • 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 AnalysisThe 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 AnalysisThe Boston Matrix The Boston Matrix – Dogs • Low market share in low growth markets • These firms do not generate cash • Firms may want to get rid of such products • May be held for strategic reasons e.g. to maintain market share • E.g. Video recorders
Product Portfolio AnalysisThe Boston Matrix The Boston Matrix – Cash Cows • High market share in a slow growing market • Often mature products with well established producers • They generate more income for the business than is invested • Little room in market for further growth • Much of the promotion is already done • Good product awareness in the market for the product • May become dogs • 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 AnalysisThe Boston Matrix The Boston Matrix – Stars • Large share of a fast growing market • Highly successful products which may generate high incomes • Usually expensive to market/promote • 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 • E.g. Apple I-pod
Product Portfolio AnalysisThe Boston Matrix The Boston Matrix – Problem Child • Small market share in a fast growing market • Products may be a success or they may fail - very vulnerable • Generate little income • Products have an uncertain future • Need large investment in marketing to create awareness and brand image • Mostly new products onto a market • E.g. Microsoft X-box when it was launched in 2001
Product Portfolio AnalysisThe 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: • What is meant by the term ‘Product Lifecycle’ (2 marks) • What is meant by the term ‘Product Portfolio’ (2 marks) • What is meant by the term ‘Boston Matrix’ (2 marks) • What is the core purpose of ASOS.com? (2 marks) • Describe the marketing mix of ASOS.com. (8 marks) • Draw and label the stages of the product lifecycle for ASOS.com’s own label products. (12 marks) • Analyse how the product lifecycle gives ASOS.com greater control over their business operations. (8 marks) • Describe how ASOS.com measure the effectiveness of their promotional activities. (6 marks) • Describe ASOS.com’s approach to promoting their products. (6 marks) • Discuss the factors ASOS.com should consider when deciding whether to spend more on promoting particular products? (8 marks) • Refer to the Boston Matrix and the product lifecycle when answering this question. Total Marks: 56