some questions regarding profitability analysis. Would be awesome to get some hints, confirmations:
1. In a situation, where we have three products, two of them have a profit margin of 30%, whereas the third has a profit margin of (-10%) i.e. we losing on this product. Instead of stop subsidizing this third produt, can we instead target customers for the other two products in order to increase the overall profit margin via targeted advertising? If this works, is it mathematically because the other two products with profit margin of 30% are weighted stronger through more units sold compared to the revenues of the third product (which should decrease through targeted advertising)?
2. In a situation where costs and revenue increase, the margin always (!) decreases (increases) if the costs increase proportionally stronger (weaker) than the revenues? However, we cannot say anything about absolute profit changes if the margin decreases - correct?