Archive for July 2016
Will Culling Low Margin Items Actually Destroy Profits? An Exploration into Economies of Scope
Firms often sell low margin items because customers seek the low margin items and, when buying, buy higher margin items as well. These low margin items can make sense through their enablement of the firm to profit from economies of scope. Killing low margin items can make sense in some cases, but other cases doing so will kill the firm.
Read MoreHow to Stop Discounting Practices of Salespeople from Destroying Your Profits
Neither revealing the company’s cost structure to front line salespeople, nor managing sales performance metrics and salespeople’s compensation with constantly varying variable costs isn’t strategically beneficial or managerially realistic. Alternatively, profit sharing plans have been used, but they don’t reward individual performance, just team performance.
Read MoreTesla’s Software Upsell
What Tesla has changed for the automotive industry is now that upselling process can continue long after the purchase of the vehicle. If you buy a S60 then get a better-paying job with a longer commute, you can choose to upgrade with essentially no additional cost to serve for Tesla. And spacing out the payments for the vehicle and later the capacity may make the original vehicle purchase more palatable for the consumer.
Read MoreWill Bid for the Presidency Destroy the Trump Brand?
Politico writes: “But as Trump the candidate has ascended, hitting the top of the polls and staying there thanks to a series of controversial statements and a groundswell of Republican populist support, the opposite has happened to Trump the brand.”
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