Where Value Hides: A New Way to Uncover Profitable Growth For Your Business by Stuart E. Jackson

Author:Stuart E. Jackson
Language: eng
Format: mobi, pdf
Published: 0101-01-01T00:00:00+00:00

FIGURE 6.1 Representative Market Shares for C.H. Guenther Retail Products

How would those choices be defined and made?

NUMBERS AND WHAT TO Do WITH THEM

Guenther's sales and marketing organization was grouped into three divisions, each representing a different sales channel for its products:

1. Retail.

2. Food service (through distributors).

3. Chain restaurants (casual dining and quick-service restaurants).

Each division was headed by a vice president with responsibility for the sales in his or her respective division. Naturally enough, each VP felt that his or her division was the mainstay of the business and deserved more sales resources, more R&D to develop new products, and more manufacturing investment to increase capacity for the products their customers needed.

To help resolve these conflicts, the company undertook an extensive activity-based cost analysis for all of the products sold through each of the three channels. When the company looked at the results, products were all over the map. The company produced more than 150 different products, and there were huge differences in profitability among the various products. To make sense of this, the company then looked at how various costs were linked to key factors, including Contribution/Selling Costs, Freight, General and Administrative (G&A) expenses, and Production facility. The results, reproduced in Figure 6.2, included some startling findings.

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