Evaluating a Declining Business
By Maggie Wright
Sometimes, when business sales are declining, the most difficult challenge is to determine the cause of the decline. Here are a few suggested areas to probe for analyzing and evaluating areas of decline and "soft sales:"
• What is the profitability change versus three years ago? Last year?
• Can the profit loss be isolated? Is it due to volume decline? Change in product volume mix? Increased costs?
• Is the sales decline due to consumer sales or market distribution losses?
• Is the volume decline in: Selected items? High margin items? Specific geographic areas?
• What percent of the volume is controlled by key accounts (top customers)? Is the decline with these accounts?
• What are the sales per point of distribution trends? Where are the sales per point of distribution sales declining? Is the decline in one product item or across the line?
• Are the marketing programs different from three years ago? Last year? How are they different?
• Can any marketing problems be isolated? Pricing? Trade promotion? Advertising? Consumer promotion?
• What is the competition doing differently versus a year ago?
• What are the consumer perceptions, likes and dislikes of my brand?
• Is the brand's softness due to consumer behavior and attitude changes?
• Is there any information from past research indicating a problem?
• Do I have a solid strategic understanding of how the consumer perceives my category and how the consumer purchases products/services in this category?
Margaret T. Wright (Maggie) is President of The Wright Marketing Blueprint, Inc. (www.WrightMarketingBlueprint.com )
She helps clients build strong emotional connections between their brands and consumers.
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