文档介绍：Author: Gisele Garraway
Contributor: Steve Berez
Profitability
Product Line
March 1998
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Product Line Profitability
Agenda
PLP overview
Applications
PLP steps
Client example
Challenges
Key takeaways
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PLP overview
Applications
PLP steps
Client example
Challenges
Key takeaways
Product Line Profitability
Agenda
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Product Line Profitability
PLP Description
Product line profitability (PLP) is a diagnostic tool that helps us determine the “true” profitability of each product within a multi-product portfolio.
Picture Frames
Operating Margin
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Product Line Profitability
Profit Improvement Tools
PLP analysis is one of the Bain diagnostic tools that can identify sources of profit improvement.
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Profitability
Relative Market Share
Bain profit improvement tool kit
PLP
BDP
RCP
VMR
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Profit Line Profitability
Why Bain Uses PLP
Senior managers can use PLP analysis to make important decisions about product lines.
For which products should we increase prices?
Where should we focus our cost reduction efforts?
Which product lines should we drop?
Which products should we focus R&D efforts on?
Where should we provide sales incentives?
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Product Line Profitability
Typical Accounting System Versus Bain PLP
Unlike typical accounting systems, PLP involves driving below gross margin and allocating costs to get to an operating margin for each product line.
Typical accounting system
Bain PLP
Cost collection:
By function (. R&D, advertising)
By product line
Cost assigned to products:
Cost of goods sold
direct labor
direct materials
All costs, including all indirect costs
overhead
advertising
distribution
Key product profitability measure:
Gross margin (revenue - cost of goods sold)
Operating margin
Cost allocation method:
Accounting standards
Activity-based cost drivers
Disadvantage:
Oft