Acing Your Product Matrix as a PM: a Guide

The product matrix is a strategic tool used to manage and prioritize different products within a company’s portfolio. It is a visual representation that aids in decision-making by providing a clear overview of the product’s current position and future potential. This tool is instrumental in facilitating informed decisions about product development, marketing strategies, resource allocation, and even product discontinuation.

Creating a Product Matrix

Creating a product matrix begins with defining the dimensions or axes that are most relevant to your business. These could be factors such as market growth rate, relative market share, profitability, or any other criteria that are crucial to your organization’s strategic objectives.

Once you have defined the dimensions, the next step is to plot your products on the matrix. Each product or product line is represented by a circle, the size of which usually indicates the product’s sales volume or revenue. The position of the circle on the matrix represents its performance against the defined dimensions.

For example, if you’re using market growth rate and relative market share as your dimensions, a product with a high market share in a high-growth market would be placed in the upper right quadrant of the matrix, indicating it’s a star product.

This visual representation allows you to quickly assess the status and potential of your products, making it easier to prioritize and make strategic decisions.

Four Categories for Prioritization

While the specific categories used in a product matrix can vary depending on the dimensions chosen, a commonly used framework is the Boston Consulting Group (BCG) matrix, which classifies products into four categories: Stars, Cash Cows, Question Marks, and Dogs.

1. Stars: These are products with a high market share in a high-growth market. They are the leaders in the business and require continuous investment to maintain their market position and fend off competitors. The goal with star products is to become the next cash cows.
2. Cash Cows: These are products with a high market share in a low-growth market. They generate more cash than what is needed to maintain their market share. Being mature and successful, they require less investment. The cash generated from these products is often used to fund other products within the company.
3. Question Marks: These are products with a low market share in high-growth markets. They require substantial investment to increase their market share. Question marks are potential star products and can become either stars or dogs depending on the success of their growth strategy.
4. Dogs: These are products with a low market share in a low-growth market. They neither generate much cash nor require a large amount of cash. Unless dogs can be turned into cash cows, they are often phased out.

The product matrix is not a one-size-fits-all tool. The dimensions and categories should be tailored to your company’s specific context and strategic objectives. It should be used as a guide rather than a strict rulebook, as it does not take into account other potentially significant factors such as market competition, product lifecycle stages, or potential market disruptions.

Wrapping It Up

In conclusion, a product matrix is a powerful tool for product managers, providing a clear and visual representation of the product portfolio’s current status and future potential. By using it effectively, product managers can make more informed decisions about where to invest resources, which products to develop further, and which ones to phase out. It’s a strategic tool that, when used correctly, can significantly contribute to a company’s overall success.