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Product Life Cycle and Boston Matrix

Product Life Cycle and Boston Matrix

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Published by: farazdrums8748 on May 17, 2009
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05/11/2014

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Product Life Cycle and the Boston Matrix The product life cycle is the theory that all

products follow a similar pattern over time, of development, introduction, growth, maturity and decline. It shows the sales of a product over time. It helps in planning marketing activities and adjusting the marketing mix. The product life cycle also helps in determining how much capacity will be required in future. It also helps in planning ahead for cash flow problems, particularly in the development and introduction phases. Extension strategies are used to prevent a decline in the product’s sales, and include: • Targeting a new section of the market • Developing new uses for the product • Increasing usage of the product Product portfolio analysis examines the existing position of a firm’s products. The Boston Matrix shows the market share of each product and the growth of the market in which it operates. The Boston Matrix is a way of analyzing the current and possible future position of a range of products owned by a business. By analyzing the position of each product, the business can decide where to direct its marketing efforts. The four types of products are: • Cash cow: high share of a slow growing market • Problem child: low share of a fast growing market (share needs to be increased for success) • Star: high share of a fast growing market • Dog: low share of a stable/declining market Strategies arising from product portfolio analysis include: • Building: promotion and distribution to increase sales, usually of problem children • Holding: marketing spending to maintain sales, usually of stars • Milking: minimal investment, taking whatever profits can be made, generally of cash cows • Divesting: selling off a product, usually a dog or problem child

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