Are You Promoting the Right Products and Services?
Most businesses have a range of products and services they sell, and hopefully they all make a positive contribution to your bottomline, but this is not always the case. Too often marginal products and services are being promoted generating profitless turnover and therefore a loss when the cost of the sale is included.
It’s essential when deciding how to allocate your precious marketing resources, that they are focused on your most profitable products and services. The problem is that many business owners don’t understand the true cost of goods sold, and thus the profit for each of their products and services. While consumables are readily identifiable, the labour and other business resources are not properly allocated, resulting in a distorted picture of the profitability of each product and service. In addition, the true cost of the sale for each has not been calculated.
As a result of an inadequate understanding of the profitability of the individual products and services poor marketing decisions are made by the business. While there is usually a gold mine in most businesses, these are subsidising black holes, and the more you promote the black holes, the bigger the loss from them you make and the larger the subsidy you require. Every sale from them is costing you money!
Once you understand which are the marginal products and services in your business, you can develop a strategy to make them more profitable. Some ways this can be done are:
– Reducing the costs of the product or service (there are multiple ways this can be done)
– Repackage the product or service
– Increase the price (if you are making a loss on it, why wouldn’t you?)
– Reposition the product in the market where the value is higher
Or if none of these options are desirable, you can drop the product altogether so that you can focus on promoting the gold mines (although I would still increase prices before I did that- what have you got to lose? You’d be surprised how increasing prices carefully can often increase sales!)
Having decided a strategy for each of your products and services, you can then create a marketing plan to deliver the results you want for each of your market segment. Don’t make the mistake many make, of taking a one size fits all approach to your marketing.
So undertake this analysis first, or else heed the wise words of the Cheshire Cat to Alice, “If you don’t know where you are going, any road will take you there!”
May Your Business Be – As You Plan It.
Dr Greg Chapman – The Profit Whisperer
Learn more about how these marketing strategies would work in your business when you request a Free Preview copy of the best selling Small Business book; The Five Pillars of Guaranteed Business Success
Or find out how to directly apply and implement these strategies into your business and achieve your goals by requesting a Complimentary Business Evaluation now.