Assortment analysis using the Boston Product Matrix
Posted: Wed Jan 29, 2025 7:05 am
The finished diagram shows that all the nomenclature positions are distributed among different squares, which have their own names and denote something specific.
Sector "Stars"
These are the positions that have the highest market share and growth rate. These are real stars. They require a lot of investment, but the return is great. Products in this category are hotmail email list in high demand, they attract customers, they develop rapidly, etc. When the moment of decline in popularity comes, the "Star" goes into the status of "Cash Cow".
Sector "Cash Roofs"
They occupy a large market share, but the growth rate is low. They are also called "Money Bags". They do not require much investment, and the profit from their sale is constant and large. From it, funds are allocated to finance other product groups. "Cash Cows" are really "milked", they justify their name.
Sector "Question Marks"
They occupy a small market share, but are distinguished by a high growth rate of sales. If you want to increase their percentage, you will have to spend both time and money. And here it is important to scrupulously study the indicators of the BCG product matrix to understand whether your "Question Marks" will turn into "Stars". This is why they are often called "Dark Horses", "Problem Children" or something like that.
Sector "Dead Dogs"
The weakest and least promising category. Slow growth rate, small market share, low income and profitability. All you can count on here is self-sufficiency. You shouldn't invest in "Dead Dogs" (you can also find the name "Dead Weight", "Lame Ducks"), and it's better to remove them from the assortment altogether.
Thus, having built a product matrix according to the principles of the Boston Consulting Group and having analyzed the resulting picture, it is possible to apply a specific strategic approach to each of the sectors of the scheme:
In order for the "Dark Horses" to sell better and move into the "Star" category, we should try to increase their market share.
It is advisable to maintain the position of "Cash Cows", that is, maintain their market share at the same level. After all, they are already selling well and bringing in a stable income, so let it be so.
Reducing market share makes sense for Dead Dogs, not very profitable Cash Cows and Problem Children, which have little hope.
It often makes sense to completely eliminate “Dead Dogs” and unpromising “Problem Children” who do not bring any benefit to the business and become unnecessary ballast for it.
Sector "Stars"
These are the positions that have the highest market share and growth rate. These are real stars. They require a lot of investment, but the return is great. Products in this category are hotmail email list in high demand, they attract customers, they develop rapidly, etc. When the moment of decline in popularity comes, the "Star" goes into the status of "Cash Cow".
Sector "Cash Roofs"
They occupy a large market share, but the growth rate is low. They are also called "Money Bags". They do not require much investment, and the profit from their sale is constant and large. From it, funds are allocated to finance other product groups. "Cash Cows" are really "milked", they justify their name.
Sector "Question Marks"
They occupy a small market share, but are distinguished by a high growth rate of sales. If you want to increase their percentage, you will have to spend both time and money. And here it is important to scrupulously study the indicators of the BCG product matrix to understand whether your "Question Marks" will turn into "Stars". This is why they are often called "Dark Horses", "Problem Children" or something like that.
Sector "Dead Dogs"
The weakest and least promising category. Slow growth rate, small market share, low income and profitability. All you can count on here is self-sufficiency. You shouldn't invest in "Dead Dogs" (you can also find the name "Dead Weight", "Lame Ducks"), and it's better to remove them from the assortment altogether.
Thus, having built a product matrix according to the principles of the Boston Consulting Group and having analyzed the resulting picture, it is possible to apply a specific strategic approach to each of the sectors of the scheme:
In order for the "Dark Horses" to sell better and move into the "Star" category, we should try to increase their market share.
It is advisable to maintain the position of "Cash Cows", that is, maintain their market share at the same level. After all, they are already selling well and bringing in a stable income, so let it be so.
Reducing market share makes sense for Dead Dogs, not very profitable Cash Cows and Problem Children, which have little hope.
It often makes sense to completely eliminate “Dead Dogs” and unpromising “Problem Children” who do not bring any benefit to the business and become unnecessary ballast for it.