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The Boston Matrix – Business Studies

The Boston Matrix is used by businesses to identify the product portfolio in a market, with four different categories to identify what four parts of the market the product could be identified into.
The Boston Matrix consists of four categories:
Star (or rising star)
Problem Child 
Cash Cows
The best way to describe these four categories is through a table:
Problem Child
This is when the product has low market share but high market growth. At the moment, there will be negative cash flow but can be seen as a potential but still uncertain about how safe it is.
Star (or rising star)
This is also known as the price leader of the market, being the product has high market share and high growth. However, lots of money will be spent on promotion to keep the product a star so cash flow is only just positive.
Cash Cow
This is where the product has a high market share but low growth. This can be seen as the maturity phase of the product life cycle: it has decreasing sales (low marker growth) but dominates the market. Cash cows tend to have a larger positive cash flow than stars as well as having a dominant share of the market. They are mature successful products that have little risk of failing unlike the others.
From the negative name giving to these types of products, this is a product with low market share and growth, sitting right at the bottom of the market. They are unattractive products that have no real potential. These products are failed products that weren’t noticed in the research and development phase of the product life cycle, or a product at the decline stage of its life.
Most businesses tend to want a product that is a cash cow as they produce the most positive cash cow. Funds raised from the cash cow will then go towards helping other products in the product range from becoming dog or a problem child. Products that are dog or a problem child will get funded in to move them preferably as a star, which will then retreat to become a cash cow.

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