Page 2: The Boston matrix and BIC products
Multi-product businesses like BIC are aware of how products in their entire portfolio contribute to the overall growth of the business. Established profitable lines make a vital contribution that enables a company to invest in the development and promotion of new lines.
The Boston Group developed 'The Boston box' or matrix. This relates closely to product life cycles and identifies four classes of products in an organisation's portfolio.
- Problem children - These are newly-launched products. This name is appropriate because many products fail to move beyond this phase. Such products are also referred to as 'Question Marks'. In order to grow, they require large amounts of investment and promotional support. Wise firms monitor each product's progress and recognise whether or not ongoing support is justified.
- Stars - These are products that have successfully reached the growth stage in the life cycle. Although they need ongoing promotional support, they are already providing high cash returns. They present good prospects for the future.
- Cash cows - These products have reached the maturity stage and are now 'yielders'. They have a high market share in markets that are no longer rapidly expanding. However, they will need ongoing marketing support and will need 'freshening up' from time to time.
- Dogs - These are products in decline. These have a low market share in a low-growing or declining market. Because they generate a negative cash flow, they will usually be disposed of.
The Boston matrix can be applied to BIC products:
- The Cristal Ball Pen and Classic Shaver are popular and well established products with very high unit sales. BIC produces them on a large scale. They provide excellent cash profits for the company.
- The Cristal Grip and Cristal Gel Pens, and Twin Lady shavers are stars with well established growth patterns. For example, the Twin Lady filled the gap in the market for shavers for women.
- Problem Children that have recently entered their respective markets include Cristal Colours and Cristal Pocket Scents in the pen market, and Comfort 3 and Soleil in the shavers market. Currently BIC is investing in these products. Over the next two or three years the company will decide whether these products have succeeded (moved into the star category) and warrant continued support. Products such as Soleil (a shaver for women) are rapidly moving into the star category.
- Of course, some products fail to take off sufficiently and/or go into decline. The 'Tough Beard' shaver has not warranted further development and BIC has taken it out of production.