How should I structure the case if there are multiple revenue segments

Question

Hi all,

I am struggeling to structure a profitability case properly when considering several revenue segments. I use the profit=revenue - cost equation and use price, quantity and mix as a first layer. In the mix I check product segments, customer segments etc. Let's say there are three different product segments and all of them see a decline in revenues. I will ask price and quantity for each revenue segment and also consumer trends, competition, distribution, and even costs. So I feel like I won't go back to my first layer with price, quantity, and mix and cover everthing (even the cost aspects) in the "mix" section once I identified different product groups or even consumer groups because prices and costs might differ between them. So I am basically stuck with my mix the whole time.

Appreciate any help!

Answer 1

Hi there,

You may find those discussions helpful

https://www.preplounge.com/en/consulting-forum/profitability-case-structure-1993

https://www.preplounge.com/en/consulting-forum/how-to-structure-a-profitability-case-1274

Cheers
Serhat

Answer 2

Hi,

First of all, In the clarifying questions, I ask proactively how many products / revenue streams we have

Then:

If I have just two products or two revenue streams I would split the products on the revenue level (e.g. revenue from product 1, revenue from product 2)
If I have 2+ products I usually go with revenues, split them into price and quantity. Under price, I use a vertical numbered list of products. e.g. 1) x 2) y 3) z. Same with the quantity
In the last case, I will end up with a table under my structure since both price and qty (and maybe variable costs per unit as well) will have a numbered vertical list
If it's not the problem of price / qty for either of the products - I look at mix (Customer, Geography, etc)

Best