Boston Matrix

Revision notes for Unit 3 Business studies Edexcel on the Boston Matrix

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Harry Bindloss
THE BOSTON MATRIX
1. BUILDING ­ Investment in promoting and distribution to boost sales. Appropriate for
a `problem child'.
2. HOLDING ­ Marketing spending to maintain sales. Appropriate for a `star'.
3. MILKING ­ Taking whatever profits you can without much more new investment in
the product. Appropriate for a `cash cow'.
4. DIVESTING ­ Selling off or deleting the product. Appropriate for `dogs'.
The problems with the Boston Matrix is that it is not a very realistic model as it is not very
likely that all products will fit into one of the four categories. The problems with the model
are:
Cash flow and profit might be different from the predictions of the model. Profit isn't
always linked to high market share. Despite falling sales a `dog' might still have a positive
cash flow and be profitable, immediate deletion would not be advisable in such as case.
Products may be linked. A `dog' may still be an important part of the product range for
some customers, who might not buy the `cash cow' or the `star' if it wasn't there.
Therefore, removing the `dog' from the product range will reduce the sales of the other
products too.

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Harry Bindloss
The model is too simplistic in the strategies it suggests. For instance `milking' a cash
cow may mean that the product falls behind in the market and loses its market share to
other firms who are still investing in trying to develop a competitive advantage for their
product.…read more

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