Product Mix Analysis

Mar 27, 2021

Product mix analysis is often overlooked as an analysis tool. It is relevant when a business’ revenue stream consists of different categories of products or a small number of individual products.

This is a level of analysis below the traditional sales/GP$ variance against budget and gives more insight into actual results.

The analysis looks at share of total sales & GP$ by category/product and is relevant when there is some variation in the GP% produced by these different groupings.

We are looking for instances where material differences between sales & GP$ share occur. These differences are driven by GP% ie. a below average GP% will result in a GP$ share % less than its sales share, conversely an above average GP% will result in a GP$ share higher than Sales share.

Obviously, we are looking for the higher GP% products/groups and then looking for strategies/plans to increase their sales volumes. The other strategy is how can the GP% of below average GP% categories be increased.

It is interesting to run scenarios changing product/categories sales shares and or GP% and view the outcomes. This gives an indication of the quantum of the profit improvement available.

I have developed a simple excel file and I am happy to share this no obligations, just contact me.