7.3 - Product - Part 2


7.3 - Product - Part 2



THEORETICAL FRAMEWORK: BOSTON MATRIX— PRODUCT PORTFOLIO ANALYSIS 

This method of analysing the market standing of a firm’s products and the firm’s overall product portfolio was developed by the Boston Consulting Group. 

Boston Matrix: analysing product portfolio in terms of market share and market growth. Provides an analysis of the current product portfolio but also what future strategies the firm could take next. The size of each circle represents the total revenue earned by each product. 


It categorizes products into four types:

  • Cash Cows (high market share, low growth): Well-established, profitable products in mature markets that generate strong cash flow with low promotional costs. Their earnings can fund other products.

  • Stars (high market share, high growth): Successful products in growing markets that require high investment to maintain position but offer strong future potential. They may become future cash cows.

  • Problem Children (low market share, high growth): Products in promising markets but with uncertain performance. They need investment and strategic decisions to improve or be withdrawn.

  • Dogs (low market share, low growth): Poor performers in stagnant markets, offering little return. Often candidates for discontinuation or market exit.

The Boston Matrix allows businesses to analyze their product portfolio by identifying which products need investment, support, or removal. Based on this, firms can adopt four strategies:

  • Building: Invest in problem children to grow market share, often funded by cash cows.

  • Holding: Maintain support for stars to keep their strong market position.

  • Milking: Use profits from cash cows to finance other products.

  • Divesting: Discontinue unprofitable dogs to free up resources.

While useful for strategic planning, the Boston Matrix has limitations. It offers a snapshot of current product performance but does not predict future success. It also oversimplifies complex market dynamics and assumes high market share always leads to high profits—which may not hold if margins are low. Ultimately, it should be used alongside detailed market research and managerial judgment.

PRODUCT BRANDING

Increasing brand awareness and brand loyalty are primary goals of promotional activity in early months or years of a product’s launch, and it is inherently linked to corporate brand/image (discussed in the previous lesson "Marketing planning”. Branding allows products to project their own identity, that will hopefully make them stand out amongst competitors. 


There are several common types of branding, each with specific strategies, benefits, and drawbacks:

  1. Family Branding (Umbrella Branding)
    All related products are sold under one brand name.
    Example: Heinz (ketchup, beans, sauces).
    Benefit: Builds strong, consistent brand image across products.
    Limitation: A failure in one product may damage the reputation of all.

  2. Product Branding (Individual Branding)
    Each product has a unique identity and branding.
    Example: Procter & Gamble brands like Ariel, Tide, and Gillette.
    Benefit: Allows targeting of specific market segments.
    Limitation: More costly due to separate promotion for each brand.

  3. Corporate or Company Branding
    The company name itself becomes the brand for all products.
    Example: Apple or Virgin.
    Benefit: Promotes trust and recognition; company reputation enhances all products.
    Limitation: A scandal or poor product can damage the whole brand image.

  4. Own-Label Branding (Store Branding)
    Retailers create their own branded products.
    Example: Tesco Finest, Amazon Basics.
    Benefit: Higher profit margins for retailers; offers value to price-conscious customers.
    Limitation: Often perceived as lower quality compared to national brands.

  5. Manufacturers’ Brands
    Brands created by the producers and often promoted widely.
    Example: Coca-Cola, Nestlé.
    Benefit: Strong brand loyalty and wide recognition.
    Limitation: High marketing costs to maintain awareness and image.


  • Brand: A name, symbol, or image that identifies and differentiates a product.

  • Brand Awareness: How well the brand is recognized by the target market.

  • Brand Loyalty: Customers’ repeat purchases despite competition.

  • Brand Development: Market penetration of a product, usually measured per 1,000 people.

 

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