Question 25

‘We need more focus, more direction’ stressed Maria Donatelli, the Marketing Manager of LA Games. ‘Yes, but which direction?’ snapped her husband Ben. ‘Its all very well going on about direction and focus but, surely, we need to decide where we want to go.’

It was a familiar discussion at LA Games, a medium sized family firm that had produced board games and puzzles for the last twenty-five years. For most of this time, the firm had been highly successful, making a range of products that sold well in the UK and in Europe.

However, the last few years had been difficult. The huge growth in the electronic games console market had resulted in falling sales, with some product ranges affected more than others. Details of current product ranges are given below:

Family Favourites: This range of products, including chess, drafts and snakes & ladders, has maintained its popularity. It still has a large market share and faces little competition in this static market.

Magnetic Games: Once a popular item, the magnetic games range has had falling sales for many years. This market has been affected very badly by the growth of hand held electronic games.

Electronic Games: Initially, LA Games refused to introduce a range of electronic games. However, the huge growth in this market has resulted in the development of a small number of products, which have recently been launched.

Adult Games: In the mid 1980s, LA Games launched their range of board games specifically targeted at adults. The games were a huge success and sales are still high. The market for adult games is continuing to grow but LA Games is facing strong competition from rival firms.

Children’s Games: Although LA Games built their reputation on their wide range of games for children, sales have fallen steadily now for a number of years. Due to advancing technology, this market is slowly falling in size.

Question 5 continued

Questions

1. a) Define the term ‘product portfolio’. (2 marks)

b) Draw a diagram of the Boston Matrix. (3 marks)

c) Explain how the Boston Matrix is used to analyse a firm’s product portfolio. (5 marks)

LA Games wish to use the Boston Matrix to examine their product portfolio to help develop a

strategy to increase future profits.

2. a) Classify each product range using the matrix, giving reasons for your decisions. (5 marks)

b) Recommend a future strategy for LA Games. (10 marks)