The Boston matrix analyzes the company’s product portfolio or strategic initiatives.
The products are divided into matrix fields according to market share and according to the growth of the given market. The combination of these parameters then creates four product groups:
Question marks
Fast-growing market and small share – products introduced to the market, the market decides whether to make them later to make dairy cows, or to be discarded. Experience shows that we can earn as fast on the question mark as we can do a lot.
Stars
A fast-growing market and a high market share – a product that has the highest business results and deserves the most attention. We need to make them dairy cows, because they will bring us profit. Revenues from them will increase for some time even without our intervention. Watch out for competition that is growing fast. We need to constantly improve the stars to keep the stars.
Cash cows
Slow growing market and high market share – they do not need high investments and even though they do not bring high profits, they are the best in their category. They do not require investment in innovation (improvement), but only in maintaining a high market share.
Pet
Slow growing market and small market share – products that end. Products that arose from bad managerial decisions or from cash cows. These were insufficiently taken care of. They need to be silenced and withdrawn from the market. The time to stay in the market depends on the consideration of the company. Take into account that they do not make money, but they are good promotion. The company should not get rid of every dusty dog immediately.
In 1968, this model was invented by Brus Doolin Henderson of The Boston Consulting Group (hence BCG).
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