There are two basic factors that determine a company’s product portfolio: market attractiveness and the company’s competitive strength. The most important measures for these factors are growth rate and market share, respectively. If a company has multiple products or product groups, it can use this matrix to analyze how its products are performing and develop a product strategy,
The interaction between these two factors divides the matrix into four quadrants: high growth
high market share, high-growth stars; low-growth, high-market-share cash cows; high-growth, low-market-share question marks; and low-growth, low-market-share dogs
As highly profitable products, cash cows are an important source of funds for a company and can also support products in other quadrants, especially the development of stars. But since they have little room for further growth, the company does not need to invest too much in them. It’s like having an eldest son who has started working and sends money home every month, while all you need to do is cook him dinner when he gets home from work.
Star products are the hope of an enterprise’s future, but they often require a great deal of the enterprise’s funds and resources. They are like the second child in a family who has just been admitted to college: everything good is given to them, in the hope that after graduation they will earn more money than the eldest child,、
Problem products with high growth but low market share are full of uncertainty. They are like the problem child in a family—the third child is smart but always skips school. Dealing with them requires patient guidance; perhaps they can get back on track and become like the second child.
Then there is the “dog” that amounts to nothing: the moment you look at it, it starts acting up. You cannot keep supporting it; if necessary, leave it to the eldest—I am staying out of it. A business can take a similar approach: manage the dog business together with a cash cow product, or bundle them in a buy-one-get-one offer.
When using this model, what it requires is relative market share. In other words, an enterprise’s products do not have to be compared across the entire market. If you are just getting started and cannot compete with the leading products, you can compare yourself with some of the sales competitors at your current stage in order to identify relative strengths and relative problems. Otherwise, you may end up thinking, “Sigh, compared with others, all my products are dogs.” The breeds may simply be different—the difference between a Border Collie and a Husky. That can be very discouraging and leave you with no motivation to formulate any strategy. So no matter what your current situation is, you must always find an evenly matched competitor. You need a competitor to use the Boston Matrix; if you do not have one, create one so that you can use the Boston Matrix.