Wednesday, November 06, 2019

MBA in a Nutshell #12 - Marketing : Marketing Mix - Product - Boston Matrix

Image result for boston matrix

The Boston Consulting Matrix was my first exposure into the power of 2x2 matrices. Some genius found a way to build a map of where all your products stand vi-a-vis each other based on the twin axes of market share and growth rate.

This generates 4 possible quadrants :

a) Star - High Growth, High Market Share

These are the stars of the show who have a dominant position in a high growth industry. If your product is placed here, this is an enviable position to be. While my ERM class is growing fairly quickly in 2019, my market share has some room for improvement. At this stage, the only way I can resolve this issue is to clone myself.

b) Cash Cow - Low Growth, High Market Share

These are the bread and butter product lines that you need to have in your company. While the growth is no longer there, like dividend stocks, these product lines generate the cash flow used to sustain the rest of your company. The Stars of yesterday tend to become the cash cows of today.

c) Question Mark / Problem Child - High Growth, Low Market Share

Some industries can be high growth but you may not have a dominant position in this industry. Problem Child is named this way because it is not too clear how much more you want to invest in marketing these products. I suspect that effort will have to be made to differentiate this product further in order for marketing to succeed.

d) Dogs - Low Growth, Low Market Share

I would characterize a large number of my competitors as falling into this category. There are a lot of training vendors who cover value investing and each vendor has to compete over a shrinking pool of investors who are getting more sophisticated tools and information portals to invest in local markets. We're even seeing some major information vendors leave our market.

A significant part of running is getting rid of your Dogs so that resources can be deployed to turn your Problem Child into Stars.

After positioning all your products into a Boston matrix, a company owner can then decide whether to include/exclude a product, bundle one product with another, or raise the price.

For my own program, we have been refining materials, adding value and raising prices for a large part of 2019.

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