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November 2017

products in a store
1024 683 Mike Stanicek

Is your Product Profit Contribution Optimized?

Know your Product Profit Contribution

There are many fundamentals that successful businesses focus on to maintain their profitability.  They include sales, hiring great employees, customer satisfaction, on-time delivery, operations, and innovation.  One area that does not get reviewed enough is the product portfolio profit contribution.  It is critical to complete frequent reviews of your product portfolio to ensure it is meeting expected targets and sales goals.  A comprehensive review and action plan can help you realign your portfolio to maximize your product profit contribution.

Analysis needed to Uncover your Product Profit Contribution

Here is some analysis that should be done to ensure your product portfolio is delivering the most revenue and profit for your business:

  • Work with finance to update the fully loaded costs of each product or SKU
  • Have your product managers review pricing and competitiveness of each product
  • Have supply chain review latest materials costs and look for optimization opportunities
  • Review the products generating the top 20% of revenue and profit
  • Complete weighted profit analysis based on sales generated

Actions needed to Raise your Product Portfolio Profit Contribution

  • Implement cost reductions on your most valued products
  • Adjust pricing (up or down) for competitive conditions and product profit contribution
  • Align your marketing and sales strategies around your most profitable products
  • Update your future product road map based on projected market needs and gaps
  • Evaluate channel optimization strategies
  • Remove products that are not hitting the right profit targets

These actions will align your organization’s marketing and sales around your most valuable products while optimizing your ability to create profit momentum.

Profitum Consulting will utilize a Product Advancement Process (PAP) that will walk you through the necessary steps.   We can sit down with your team and lay out a work plan to optimize your product portfolio.  To get started email us at info@profitumconsulting.com or call 760-695-6772

www.profitumconsulting.com