Boston matrix and product life cycle

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Boston matrix and product life cycle

  1. 1. Unit 2 Marketing The Marketing Mix – Product (Boston Matrix)
  2. 2. Learning starts with a question..... In your groups, answer the question: What is product portfolio analysis and why is it important?
  3. 3. Product portfolio analysis • It is a method used to identify the position of every product in a company’s portfolio within its target market.
  4. 4. Product portfolio analysis can be done with: • The Boston matrix • The product life cycle
  5. 5. The Boston Matrix • It is the method of analysing the products in a company’s portfolio based on their share of the market and the growth of the market
  6. 6. The Boston Matrix
  7. 7. The question mark/Problem child • New products with a low share of a high growth market • High maintenance • High failure rate but potential for future success
  8. 8. The rising star • Products with a high share of a growing market • High maintenance • Generates a lot of income
  9. 9. The cash cow • Products with a high share of a low growth market • Generates high profit for the business • Low maintenance What has happened to the X-Box? Did Microsoft manage to turn it to a star or cash cow?
  10. 10. The Dog • Products with a low share of a declining or low growth market • High cash burn rate • Generates little or no income
  11. 11. Example of a Boston Matrix for an independent newsagent Question Mark Rising Star Sporting memorabilia - Lunch deals -signed, framed photos of local sports stars Dog Cash Cow -Convenience food -Postcards -Stationery items -Pay phone cards -Cigarettes, chocolates, sweets, lottery tickets and scratch cards - Local and national newspapers, magazines - Mobile phone top up
  12. 12. Group activity • Prepare a portfolio analysis for a mobile phone company 1. Pick a mobile phone company (Nokia, Samsung...). 2. Think about the mobile phone market at the moment, is it growing or is it relatively static? 3. List the product portfolio and place each of their phones on a Boston Matrix chart. 4. Discuss with your classmates your selection.
  13. 13. What is the relevance of the Boston Matrix in Business?
  14. 14. The Product life cycle • It shows the path of a product from its development to its disappearance from a business’s portfolio and the sales expected at each stage
  15. 15. The Product Life Cycle Sales • Sales • Sales are low • Profits will be • Product is being designed negative • Product may be unknown Development Introduction •Sales reach • Similar its highest point products enter the market • Sales falling •Rate of growth • Profits will • Profits continue slows •Price lowered reach their to fall highest at the •Competitors •Some end of this stage enter businesses the market may be forced out of the market increasing rapidly Growth Maturity Saturation Decline How does the product life cycle relate to the Boston Matrix? Time
  16. 16. Group activity Choose two products from the list below and draw product life cycle sketches for the products and services below: 1. 2. 3. 4. 5. 6. iPad James Bond films Dove chocolate bar BMW’s Mini Coca-Cola QQ • Discuss with your classmates your selections
  17. 17. Decline / Dog Maturity & Saturation / Cash Cow Growth / Rising Star Introduction / Problem Child Sales Product Life Cycle – BMW 3 Series Why do BMW keep releasing another 3 series? 191975-82 1982-1990 1990-1998 1998-2006 2006 -> Why do some products have a long life cycle while others do not?
  18. 18. Group activity • Read the MINI case study and answer the question given…..
  19. 19. in t r o d u c e n e w v a r ia t io n s o f t h e o r ig in a l p r o d u c t , e . g . a c h ild r e n ' s v e r s io n s e ll in t o n e w m a r k e t s , e .g. e x port th e p rod uct to anoth er country m a k e s m a ll c h a n g e s t o t h e p r o d u c t ' s d e s ig n , c o lo u r o r p a c k a g in g EXTEN DIN G TH E PRO D U CT LIFE CYCLE use a new a d v e r t is in g c a m p a ig n in t r o d u c e a n e w , im p r o v e d v e r s io n o f t h e o ld p r o d u c t s e ll t h r o u g h a d d it io n a l, d if f e r e n t r e t a il o u t le t s
  20. 20. For next class: • Research – The Marketing Mix (PRICE)

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