What is a profitable product?
Article Abstract:
Product mix decisions can have a critical impact on both the profitability and competitive position of a firm [7] (Porter, Michael: Competitive Strategies, New York, The Free Press, 1980.). Typically, a product mix decision is made by comparing product profit margins and considering nonquantitative criteria including "carrying a complete line of products" [1,6](Boyd, H. W, Jr., and Walker, O.C., Jr.: Marketing Management: A Strategic Approach. Irwin, Homewood, IL, 1990.)(Kotler, P.: Marketing Management: Analysis, Planning, Implementation, and Control. Prentice-Hall, Englewood Cliffs, NJ, 1988.). In some situations, however, product profit margins may lead to erroneous strategic decisions about product mix [5,9] (Johnson, H.T., and Kaplan, R.S.: Relevance Lost: The Rise and Fall of Management Accounting. Harvard Business School Press, Cambridge, MA, 1987.)(South, J.B., and Oliver, J.E.: A Value Added Approach to Product Mix Decisions. Industrial Marketing Management 21, 167-171 (1992)). In this article, two terms are introduced and defined. The two terms, marginally profitable and fully profitable, allow the description of four classifications of products so that better product mix decisions can be made. A product may be both marginally and fully profitable, marginally but not fully profitable, neither marginally nor fully profitable, and even fully but not marginally profitable. Advice on how to manage each product in the product portfolio is provided. (Reprinted by permission of the publisher.)
Publication Name: Industrial Marketing Management
Subject: Business, international
ISSN: 0019-8501
Year: 1998
User Contributions:
Comment about this article or add new information about this topic:
The new product development process for commercial financial services
Article Abstract:
The attention of senior executives in the financial services industry is increasingly being focused on how well the new product development process is working within their institutions. This focus on product development results from the combined pressures of increased competition, a rapidly changing marketplace, new technology, and new and pending legislative changes. All of these factors underscore the need to be able to design, develop, and launch, in a timely fashion, new products that are winners. A strong new product initiative is now considered an essential weapon in both offensive and defensive initiatives. To achieve their goals, executives are increasingly reexamining their organizations' approach to development and launch of new products to determine if the process can be redesigned for faster reaction time, better utilization of limited resources and improved success rates. This article examines the new product development process within the setting of corporate/commercial financial services. Its conclusions provide executives with some broad principles for their own new product processes to help them in their quest for competitive advantage through winning new products. (Reprinted by permission of the publisher.)
Publication Name: Industrial Marketing Management
Subject: Business, international
ISSN: 0019-8501
Year: 1996
User Contributions:
Comment about this article or add new information about this topic:
- Abstracts: An exploration of inter-functional integration in the new service development process. A service-informed approach to regional innovation - or adaptation?
- Abstracts: Measuring intangible value in business-to-business buyer-seller relationships: An intellectual capital perspective
- Abstracts: The asymmetric relationship between attribute-level performance and overall customer satisfaction: A reconsideration of the importance-performance analysis
- Abstracts: Futures, foresight and forward looks: reflections on the use of prospective thinking for transport and planning strategies
- Abstracts: The super-foods that make you unstoppable. Make 2005 your best year ever! Tips that'll make you an eBay genius!