Boston Matrix

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

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Harry Bindloss
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
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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