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IGCSEBusinessEdexcelRevision Notes4. MarketingThe Marketing MixPortfolio Analysis

Portfolio Analysis (Edexcel IGCSE Business)

Revision Note

Lisa Eades

Written by: Lisa Eades

Reviewed by: Steve Vorster

Boston Matrix

  • The Boston Matrix is a tool used by businesses to analyse their product portfolio and make strategic decisions about each product

  • The matrix classifies products into four categories based on their market share and the market growth rate

    • Cash Cow

    • Problem Child/Question Mark

    • Star

    • Dog

  • The Boston Matrix helps businesses have a balanced product portfolio

    • Profitable cash cows fund the development of problem children and ensure stars receive the investment they require to maintain their market leader position

    • Unprofitable dogs are divested to increase focus and funding on products with more potential
        

Diagram: The Boston Matrix

1-3-5-the-boston-matrix-and-the-product-life-cycle

The classification of products in the Boston Matrix according to their market share and the growth rate in the market as a whole
 

  • By categorising products into these categories, businesses can allocate resources more effectively, improve their cash flow and develop marketing strategies that align with the product's potential
     

The Four Types of Product in the Boston Matrix

Product Type

Explanation

Implications

Cash Cow

  • Cash cows are products with a high market share in a mature market (the entire market is no longer growing)

  • They generate significant positive cash flow but have low growth potential

  • They need minimal investment as they are seen as stable sources of income

  • Marketing efforts focus on maintaining their market share and profitability

  • Cash cows are valuable assets and can be used to fund the development of new products

Problem Child/Question Mark

  • Problem child or question mark products have a low market share in a high-growth market

  • These products have the potential to become stars if the company invests in their development

  • There is often a negative cash flow as businesses usually invest in problem child products to increase their market share and turn them into stars

  • Marketing efforts focus on increasing their market share and brand recognition

Star

  • Star products have a high market share in a high-growth market

  • The company typically invests in stars to maintain or increase their market share

  • They generate significant positive cash flow and have the potential for continued growth

  • Marketing efforts focus on building brand recognition and increasing market share

  • Stars are valuable assets and the business should focus on maximising their potential

Dog

  • Dog products have a low market share in a low-growth market

  • They generate little revenue for the company and have no growth potential

  • Businesses often move away (divest) from these to focus on more profitable products

  • Marketing efforts for dog products are minimal or zero

Examiner Tips and Tricks

You need to know the purpose of the Boston Matrix and the characteristics of the four different types of product

In the exam you may be asked to identify elements or their characteristics

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    Author
    Reviewer
    Lisa Eades

    Author: Lisa Eades

    Expertise: Business Content Creator

    Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.

    Steve Vorster

    Author: Steve Vorster

    Expertise: Economics & Business Subject Lead

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.