Analysis of sales and profit of a company is one of the important aspects of a marketing specialist's activities. Having at hand a correctly drawn up sales report, it will be much easier for you to develop a marketing strategy for the development of the company, and the answer to the question of the management "What are the main reasons for the decline in sales?" will not take long.

In this article, we will look at an example of maintaining and analyzing sales statistics at a manufacturing enterprise. The example described in the article is also suitable for the retail and wholesale industry, for analyzing the sales of an individual store. The template for the analysis of sales in Excel prepared by us is very large-scale, it includes various aspects of the analysis of sales dynamics that are not always needed by every company. Before using the template, be sure to adapt it to the specifics of your business, leaving only the information that is needed to monitor sales fluctuations and assess the quality of growth.

Introductory points on sales analysis

Before analyzing sales, you need to set up the collection of statistics. Therefore, identify the key metrics that you would like to analyze and the frequency with which these metrics are collected. Here is a list of the most essential sales analysis metrics:

Index	Comments (1)
Sales in pieces and rubles	It is better to collect sales statistics in pieces and rubles separately for each commodity item on a monthly basis. These statistics allow you to find the starting point of sales decline / growth and quickly determine the reason for this change. Also, such statistics allows you to track the change in the average price of shipment of goods in the presence of various bonuses or discounts to partners.
Unit cost	Cost of goods is an important aspect of any sales analysis. Knowing the level of product cost, it will be easier for you to develop trade marketing campaigns and manage pricing in the company. Based on the cost price, you can calculate the average profitability of the product and determine the most profitable positions in terms of profit to stimulate sales. Cost statistics can be kept on a monthly basis, but if this is not possible, then it is advisable to track the quarterly dynamics of this indicator.
Sales by sales area or sales region	If your company works with different regions / cities or has several divisions in the sales department, then it is advisable to keep sales statistics for these regions and directions. If you have such statistics, you will be able to understand, due to which areas, in the first place, the increase / decrease in sales is ensured and quickly find out the reasons for the deviations. Sales by destination are tracked on a monthly basis.
Distribution of goods	Distribution of a product is directly related to an increase or decrease in sales. If the company has the ability to monitor the presence of goods in the Republic of Tatarstan, then it is advisable to collect such statistics at least once a quarter. Knowing the number of points where the shipped item is directly represented, you can calculate the rate of turnover at a retail point (sales / number of RTs) and understand the real level of demand for the company's products. Distribution can be monitored on a monthly basis, but it is most convenient to monitor this indicator on a quarterly basis.
Number of clients	If the company works with a dealer link or in the B2B market, it is advisable to track statistics on the number of customers. In this case, you will be able to assess the quality of sales growth. For example, the source of sales growth is an increase in demand for a product or simply geographic expansion in the market.

Key points to look out for when conducting a sales analysis:

• Dynamics of sales by goods and directions, accounting for 80% of the company's sales
• Dynamics of sales and profits in relation to the same period last year
• Change in price, cost price and profitability of sales by line items, groups of goods
• Growth quality: sales dynamics per 1 RT, per 1 client

Collecting statistics on sales and profits

Let's go directly to an example that clearly shows how to do a sales analysis.

The first step is to collect sales statistics for each current product position of the company. We collect sales statistics for 2 periods: the previous and the current year. We divided all articles into product categories for which we are interested to see the dynamics.

Fig. 1 An example of collecting sales statistics for commodity items

We fill in the above table according to the following indicators: pieces, rubles, average selling price, cost price, profit and profitability. These tables will be the primary source for future sales analysis.

Positional statistics of sales for the year preceding the current period is necessary to compare the current reporting figures with the previous year and assess the quality of sales growth.

Next, we collect statistics on shipments for the main areas of the sales department. We break down the total revenue (in rubles) by sales direction and by main product categories. Statistics are needed only in ruble terms, as they help to control the general situation in sales. A more detailed analysis is necessary only if there is a sharp change in the dynamics of sales in one of the directions.

Fig. 2 An example of collecting sales statistics by directions and regions of sales

Sales analysis process

After all the necessary sales statistics have been collected, you can proceed to the sales analysis.

Analysis of the implementation of the sales plan

If the company is planning and has established a sales plan, then the first step is to evaluate the fulfillment of the sales plan by product group and analyze the quality of sales growth (dynamics of shipments in relation to the same period last year).

Fig. 3 An example of analyzing the implementation of a sales plan by product group

We analyze the fulfillment of the sales plan by three indicators: shipments in physical terms, revenue and profit. In each table, we calculate the% of the plan and the dynamics in relation to the last year. All plans are broken down by product category, which allows for a more detailed understanding of the sources of undersales and overfulfills. The analysis is carried out on a monthly and quarterly basis.

In the above table, we also use an additional “forecast” field, which allows us to forecast the fulfillment of the sales plan given the existing dynamics of shipments.

Analysis of the dynamics of sales by directions

This sales analysis is necessary to understand which areas of the sales department are the main sources of sales. The report allows you to assess the dynamics of sales in each direction and timely identify significant deviations in sales for their correction. We break down total sales by OS areas, for each area we analyze sales by product category.

Fig. 4 Example of analysis of sales by directions

To assess the quality of growth, the indicator "dynamics of sales growth compared to last year" is used. To assess the importance of the direction in the sales of a particular product group, the parameters "share in sales,%" and "sales per 1 customer" are used. The dynamics are monitored by quarters in order to exclude fluctuations in shipments.

Analysis of the sales structure

Analysis of the structure of sales helps to take a general look at the effectiveness and importance of product groups in the company's portfolio. The analysis allows you to understand which product groups are the most profitable for the business, whether the share of key product groups is changing, whether the price increase covers the growth of the cost price. The analysis is carried out on a quarterly basis.

Fig. 5 An example of analysis of the structure of sales of a company's assortment

According to the indicators of "shipment in kind", "revenue" and "profit", the share of each group in the company's portfolio and the change in share are estimated. According to the indicators "profitability", "cost" and "price", the dynamics of values ​​is estimated in relation to the previous quarter.

Fig. 6 An example of the analysis of cost and profitability of sales

ABC analysis

One of the final stages of sales analysis is the standard one, which helps to pursue a competent assortment policy and develop effective trade marketing activities.

Fig. 7 Example of ABC assortment analysis

ABC analysis is carried out in the context of sales and profits once a quarter.

Residue control

The final stage of the sales analysis is the monitoring of the company's product balances. The analysis of balances allows you to identify critical positions for which there is a large surplus or a shortage of goods is predicted.

Fig. 8 Example of analysis of product residues

Sales report

Often in companies, the marketing department is accountable for the fulfillment of sales plans. For a weekly report, it is enough to track the level of fulfillment of the sales plan with a cumulative total and indicate the forecast of the fulfillment of the sales plan for the current level of shipments. Such a report allows you to timely identify threats of non-fulfillment of the sales plan and develop corrective measures.

Fig. 9 Weekly sales report

Attach a small plate to such a report with a description of the main threats to the sales plan and proposed solutions that will reduce the negative impact of the identified reasons for the non-fulfillment of the plan. Describe through what alternative sources you can increase your sales.

In the monthly sales report, it is important to reflect the actual fulfillment of the sales plan, the quality of growth in relation to the same period last year, the analysis of the dynamics of the average shipping price and the profitability of the product.

Fig. 10 Monthly sales report

You can download the template for sales analysis presented in the article in the section.

Life is like a zebra: a black stripe replaces a white one. And for business, this is also just as true: either a decrease in revenue, then an increase. Surely every business person went through a time when his company experienced a decrease in revenue due to a decrease in sales. The main thing here is not to panic and not to break the wood in a hurry. In such a situation, some businessmen immediately decide to get rid of one assortment of goods and buy another, re-arrange personnel, or even completely change a long-coordinated team. Will revenue decline stop after that?

You will learn:

• What factors affect the level of revenue.
• What are the reasons for the decline in sales revenue.
• How is the analysis of the decrease in revenue at the enterprise carried out.

Why a decrease in revenue is dangerous for an enterprise

First, let's define the actual revenue. This is the amount of cash receipts from the sale of the goods of the enterprise, which is at the same time the main source of financing for the activities of this organization. The total revenue of the company is a combination of three main areas of activity:

• proceeds from the sale of goods and services rendered. By and large, this is the main task of the enterprise;
• proceeds from investors through the placement of their shares and bonds;
• investment proceeds: the monetary gain from the sale of securities and non-current assets.

As already mentioned, these types of activities form the total revenue, its decrease or increase. Nevertheless, one of them is the main one, namely the main activity of the enterprise, what it actually exists for is the release and sale of a particular product for the sake of revenue.

In general, the sale of products is the last stage of the company's work cycle, which, moreover, is of primary importance. For without revenue it is impossible to start a new production cycle, it is impossible to maintain the circulation of funds. Decreased income - production downtime. What is product sales? These are goods purchased by the consumer at retail or exported from the warehouse in bulk, and already fully paid for. It is important to remember that all kinds of indirect taxes are not included in the proceeds; there is a separate accounting column for them.

What determines the decrease or increase in the revenue of your company? Is it decreasing or increasing? Many different factors play a role here, such as: the range of goods sold, its quality and quantity, settlement and payment discipline and, of course, the company's pricing policy.

The total amount of goods sold, and, accordingly, revenue is directly related to its manufacture, as well as to the remnants of products from the previous production cycle, "rolling over" from month to month, from quarter to quarter, or even from year to year.

The conclusion is simple: revenue from products and services rendered is the main material component of the enterprise's welfare. For without its own resources constantly in circulation and replenishing, not a single company will stay afloat for a long time.

Revenue decline factors

Factors that affect the amount of proceeds from sales can be divided into two types: those that are tied to the work of the enterprise itself, and those that are not.

Factors on which the magnitude of the increase or decrease in the company's revenue depends:

• assortment of manufactured goods;
• volume of production;
• the quality of goods, as well as their ability to compete with other similar ones on the market;
• the pricing policy of the company;
• what methods can be used to pay for the goods (the more possible forms of payment, the better);
• shipment of products (the priority is a variety of shipping methods);
• stability and cyclicality of the enterprise;
• completeness of goods;
• and, of course, one of the main factors is the demand for products.

Now about force majeure factors, which are in no way connected with the activities of the enterprise and its increased or decreased revenue. It:

• problems with the bank (for example, delay in settlements);
• difficulties with transport (delay, breakdown, etc.);
• delay or refusal to pay for goods by buyers (for a variety of reasons).

Sales techniques that will save you from declining revenue

Do you already use additional and cross-selling, regularly hold promotions, offer locomotive products, but your revenue is still decreasing? Try to implement non-trivial methods from the editors of the Commercial Director magazine, which will attract the attention of even indifferent customers and motivate them to buy.

Possible reasons for the decline in sales revenue

• Seasonal drop in demand

The demand for many consumer products is tied in one way or another to the season, and nothing can be done about it. Who needs skiing in the summer, if, of course, you do not live in the Far North? But there is good news: a certain business has long adapted to the seasonal decrease in revenue and calculated all its steps "from" and "to". So, the decrease in seasonal revenues does not have much effect on the annual financial result of established enterprises. If you are planning to enter completely new markets, then you should definitely pay attention to their specifics in this regard. For example, a decrease in revenue in the summer in southern Europe. Who has not heard of siesta in hot Spain? Sellers work less during the day, buyers are less likely to meet in stores. Therefore, there is a decrease in revenue. So "shopping" siesta may well last for a couple of months due to the same unbearable heat.

• Loss of popularity of the product

Remember the phrase: "Nothing lasts forever under the moon"? Another reason for the decline in revenue is completely commonplace. The client simply lost interest in the goods produced by the company. Why suddenly? There can be many reasons. Or your product is out of date. Or competitors have a product comparable in quality, but much cheaper. Or, finally, the fashion has simply changed, which, as you know, the lady is capricious. As a result, a decrease in revenue.

• Leaving customers to competitors

Competition is a boon for consumers and a perennial irritant to business representatives. A decrease in revenue can happen literally at any moment, and the worst thing is that sometimes nothing depends on you. A strong competing company has appeared on the market - that's it, revenue is instantly reduced. Competitors began to sell goods at dumping prices - again a decrease in revenue. And it is impossible to insure yourself here. To accept the game of lowering prices - one way or another to lose even more, to fight with a “heavyweight” competitor - in general, you can be left without revenue.

• Falling demand during a crisis

"Crisis", decline in production - one of the most terrible concepts for entrepreneurs. A crisis is always a reduced purchasing power of the population. And as a result - a decrease in revenue. By the way, often people do not spend money at all, not because they do not exist. They just trite to save: "What if what?", "How long will this trouble last?", "It's better to wait until everything settles down ...". In the event of a crisis, goods of considerable value (cars, apartments), as well as those without which "can be dispensed with for the time being," suffer the most from "lack of attention". And again there is a decrease in revenue.

• Oversupply of loans issued to the population

According to many experts, often the cause of crises (and, as a consequence, a decrease in the revenue of enterprises) are loans issued to the right and left. This is exactly the same double-edged sword. It seems that due to the availability of free money from the population (thanks to bank loans) and the ability to buy expensive things "on credit", the company increases the declining revenue, which is good news. Only now money tends to run out quickly. What happened next? And then there is a decline in revenue. Because a significant part of the monthly income of the average family goes just to pay off these very loans. But you also have to pay for utilities and pay back the debt to the bank, and food products are getting more and more expensive lately. As a result, there is simply no money left for “optional” purchases, and many firms and enterprises are saddened to note a decrease in revenue.

• Unbalanced assortment

It is clear from the subheading that the organization's assortment should be as balanced as possible to avoid a drop in revenue. For this, it is better to produce goods both for earning money and for circulation. The second type of product, however, always has competitors, but there is also a constant demand for it. Let's take a simple example. Recently, thermal printing has become fashionable among the population - the transfer of drawings to anything, from cups and saucers to gift decanters with a photograph of the birthday person. As they say, who has enough imagination for what. So, thermal printing equipment is not that expensive due to the high competition. But there are more than enough of those who want to "translate" a funny picture into their favorite T-shirt or T-shirt! This means that the demand for equipment does not fade away. And there is no decline in revenue. Based on these realities, the policy of a company operating in this area should be flexible enough. This means that in a certain situation, the sale of precisely equipment for thermal printing will account for about half of the total revenue received by the company. Moreover, we are not even talking about a decrease in profits.

• Incompetence and passivity of employees of the organization

Here everything is more or less clear: personnel are often to blame for the decline in revenue. What can be done here? First of all, analyze the work of the firm's employees, in particular, sales managers. You shouldn't pay them money if:

• They offer customers what is easier for them to sell.... The decline in revenue is usually due to a lack of staff incentives to perform well. Instead of selling the most profitable products to the firm, managers advise buyers what they like best because it’s easier. And it leads to an inevitable decrease in revenue.
• The salesperson works in a hurry precisely in order to avoid a decline in profits. But it has long been known: if you hurry, you will make people laugh. In this particular case, you will leave people without a choice, since the assortment on the shelves is not complete. Haste generates inattention, as a result, the hot product is not delivered from the warehouse on time. As a result, a decrease in revenue without any crisis.

How to determine the reasons for the decline in revenue

There is nothing super complicated here. Just try thinking about the following:

1. What was the revenue last year in the same time period? Is this a typical seasonal downturn and a drop in revenue is normal?
2. Continuing to talk about the season, is the assortment on the shelves suitable for it? The wider the assortment, the greater the revenue. Well, or at least less profit reduction.
3. It also happens: almost or exactly the same amount of goods was sold as in the previous year, and a decrease in revenue is a fact. Here, most likely, it is a matter of the company's pricing policy.
4. If the decline in revenue is not due to a seasonal downturn, not because of the assortment and not because of prices, think carefully, what changes have occurred in the company over the past year? Two or three years? The "incubation period" of some financial "diseases" can be quite long. And financial "illness" is an inevitable decline in revenue.
5. Perhaps the reason is some of your actions? Or, more precisely, inaction? Maybe you started to save on advertising? The consequences of minimizing advertising, or even completely abandoning it, also do not appear immediately and often lead to a decrease in revenue.
6. How are things going inside the company, or rather, with its employees? Of course, one should not suspect every second person, but it happens that a decrease in the company's revenue is a consequence of banal theft.
7. And finally, if the norm is in all respects, everything is exactly the same as a year or two ago, then it’s not your company. And the decline in revenue does not depend on you. Isn't it time to think about your competitors? If they did not speak loudly about themselves, this does not mean at all that people are inactive. They are clearly doing something and take part of your income for themselves. You have a decrease in revenue, they, on the contrary, have an increase.

How to conduct a detailed analysis of the decline in revenue at the enterprise

Where do you start analyzing? It is not worthwhile to immediately study the decrease or increase in revenue across the entire company, focus first on its structural divisions. Calculate the contribution of all individual organizational units to the business of the entire enterprise, and draw up a monthly graph of decrease or increase in profits over the past years. There are special indices that can be used to reflect the decline or increase in prices in current or comparable prices. Indices of price changes for certain goods will also help.

If a company's revenue curve is steadily growing, then everything is in order with your company, and it should be so ideally. If there is a decline, you need to think about it. In general, the reasons for the decrease or increase in price dynamics can be measured using the methods of factor analysis.

When analyzing the state of your enterprise, do not forget about certain indicators that, in one way or another, are interconnected with the volume of sales of goods and the company's profit. The indicators of decrease or increase are as follows:

• the quantity of goods produced;
• stocks of products in the warehouse of the enterprise;
• contracts for a certain number of company goods. Compliance of this number with the technical capabilities of the organization;
• how fully and efficiently the agreements on the manufacture and loading of goods are being fulfilled;
• the share of repayment of receivables.

If you intend to correctly assess the guarantees of obtaining the greatest revenue (and even less reducing it) from the sale of goods, you need to correctly calculate the balance between the number of orders of products, the possibilities of its production and the volume of sales. Also, a balance between production volumes in the company and their synchronous change is absolutely necessary. If the condition is not met, you risk getting a decrease in revenue. So, it is necessary to analyze the change in the following points:

• Low or declining sales... The reason for the decrease in revenue can be both problems with the sale of goods and overproduction of products. Violations of contracts and problems with payment discipline are also on the list.
• Production growth rates exceed sales growth rates... There are a lot of reasons for this. Wrong market forecast for product demand, fraught with lower profits. Incorrectly specified dynamics of enterprise development. At some point, the company's products simply ceased to be in demand among potential buyers - hence the decline in revenue.
• The growth rate of production is lower than the growth rate of sales... The same decline in profits. But here the situation is reversed in comparison with the previous one. And it remains to be seen which of the two is worse. In this situation, there is a risk of violating the agreements concluded in advance, and at best, simply getting a shortage of products for sale. However, sometimes the decrease in proceeds from production is due to an oversupply of goods "in reserve".
• The rate of growth of the volume of production exceeds the rate of growth of the volume of production orders in accordance with the business contracts for the supply of products concluded at this point in time. A decrease in revenue may occur due to the fact that regular customers of the company “turned away” from the product. Also, among the possible reasons for the decline in revenue - the not fully developed program of the company for the production of products, too rapid a change in the market, which did not have time to react in time. In this case, until alternative options for selling the product have been considered, it will still uselessly occupy space in warehouses. This means that an inevitable decrease in revenue is guaranteed.
• The rate of growth of the volume of production is lower than the rate of growth of the volume of production orders in accordance with the business contracts for the supply of products concluded at this point in time. There is a decrease in revenue, and here it is not only business reputation that is at stake, although it will suffer in the first place if the company is not able to fulfill its obligations to release a certain product. This, in turn, is fraught with the loss of not only individual large customers, but also entire sales markets. Well, as a negative "bonus" - the inevitable decrease in the company's revenue.
• Reducing the number of contracts for the supply of products and their volumes... When warehouses are packed with goods, and no one is in a hurry to sign contracts for its purchase, then there is most likely one reason - there is more than enough production. This state of affairs indicates that the company's products are currently uncompetitive. As a result, a decrease in revenue.

The analysis of the changes in the above items is carried out in value terms throughout the entire activity of the company. For the assortment, the analysis is done in kind.

How to manage costs to keep your sales revenue from dropping

The dynamics of growth, as well as the size of the decrease or increase in the company's revenue, determine its financial balance. They are tied to both the turnover of the company's assets, the profitability of sales, and the actual attractiveness of the company for investment from outside.

Sales revenue depends on two factors:

1. The total volume of products sold, the piece cost of each type of product.
2. Cost of goods sold, sales proceeds.

In light of this, the revenue will be equal to the total cost of the product and the proceeds from its sale.

There are two groups of factors that determine the decrease or increase in revenue from the sale of goods.

One group of factors is used to achieve a particular revenue from a product. The other solves the problem of achieving a certain amount of revenue from sales, and the final financial result does not matter, if, in the end, you do not go into the red.

However, most often in reality (and not in theory), business owners, in order to prevent a decrease in revenue, seek to kill two birds with one stone, and therefore use both factors for calculations, especially if we take into account their interrelation.

To effectively manage sales revenue, it is important to correctly determine the nature of the cost of the product being sold.

Variables are called costs, the value of which depends on the amount of products produced and their sales, and everything is proportional here. This includes money for raw materials for goods, for piecework wages. Payment for energy for production (electricity, gas, fuel), as well as packaging for products are also from this topic.

The constant includes expenses that do not directly depend on the volume of production and sales. This is, say, rent for premises or amortization of various assets of an enterprise.

By the way, there are more specific formulations of these costs, namely conditionally variable and conditionally constant. This is due to the fact that in some situations certain costs change their "color", and one day a constant may become a variable, or vice versa.

Let's take a simple example. For example, in the employment contract of people working on piecework wages, a clause is spelled out on the payment of forced downtime. These amounts are not directly related to changes in production volumes. So it turns out that the cost from the category of variables has been retrained into constant ones.

Hence it follows that it is simply impossible to compile an exact list of certain costs for the company for the entire period of its operation. However, for this, there are specialists who, in each individual case, calculate which costs will "jump" after increasing the capacity of the enterprise, increasing the total volume of sales, and in what proportion. And whether there will be a decrease or increase in revenue. So it is not only possible, but also necessary to temporarily divide the costs into fixed and variable costs. This will help you understand how the demand curve for the product affects the increase or decrease in the company's revenue.

There are other types of costs that affect the decline in revenue: direct and indirect. Those that go only to the manufacture and sale of a particular type of goods are called direct costs. All the rest, without exception, are indirect costs.

This can be a little confusing for the layman. Because if direct costs in almost all cases will be variable, then some types of the latter are not always so "true" direct and easily turn out to be indirect. Let's take a simple example. Let's say that different types of goods are produced in the same technical room. But there is one electricity for all production lines.

As already mentioned, only direct variable costs are tied to a certain type of goods. For all other costs, distribution by product mix is ​​no more than arbitrary. What does it mean? And so that, depending on the choice of a particular attribute of distribution, the cost of a particular product can both increase and decrease. This state of affairs is extremely useful for setting upper and lower price limits for certain goods produced by an enterprise.

There is such a thing as margin profit. In short and to the point, the sum of fixed indirect costs and profits from the sale of goods contained in the revenue from the sale of goods will be called marginally th profit. Depending on the demand for a particular product, some parts will be included in its price margin arrived.

From the foregoing, the following conclusion can be drawn: the financial feasibility of selling a product is determined by one condition - the cost of sale must be higher than direct variable costs.

How to eliminate the decline in revenue from product sales

1. Study the market thoroughly

“Go there, I don’t know where, find something, I don’t know what, and sell it somehow” - this phrase is not about business. In it, one cannot hope at all "at random." Therefore, before opening your own business and counting on some kind of revenue, you should definitely carefully analyze all the components of your future market. In particular, collect information about potential competitors. Understand why they got such a result (a quick take-off or vice versa, a catastrophic decline in revenue). Analyze their mistakes and findings. And, of course, a detailed business plan that takes into account the decrease and increase in revenue in different periods of time will not hurt.

There is no normal revenue without advertising, this is known to any more or less savvy businessman. Another question is how much it costs now. For example, TV commercials “thanks” to their exorbitant prices are not available to every company. Television does not explicitly complain about the rescue. However, there is always a way out. To avoid a decrease in revenue, advertising banners on the roads, leaflets on poles and advertisements in newspapers have not yet been canceled. Among other things, with the development of the Internet, many other rather effective advertising platforms have appeared: mailing to e-mail, various kinds of sites and social networks. Spend money on advertising - you can avoid a drop in revenue.

3. Make prices flexible

Not exactly a new trick to avoid a drop in revenue. Many potential clients have figured it out long ago. However, this continues to work. How many times have you seen an ad in a particular store: 30 percent discount! Everything is fair, no one is deceiving anyone, there really is a discount. Only for some time before the decline in the store the prices for the same goods raised by 30 percent. And it is good, if not all 40.

4. Spend more promotions

All sorts of shares are our everything to avoid a decline in revenue. It can be said to be a kind of game for adults. For example, collect a certain number of coupons and get something for free - no matter what. In the same retail chains "Pyaterochka", "Dixy", etc., every week there are discounts on some categories of products - and this is also a promotion. Show your imagination, and you will definitely not face a decrease in revenue!

5. Make changes to your company

Find out if your salespeople are as good as they talked about themselves in the interview and promised that there will never be a drop in sales again. Or maybe the same product can be found somewhere much cheaper? Or does your company logo fail to impress customers?

Expert opinion

Attracting customers with a competitive offer

Timur Dasaev,

General Director of the Dachny Sezon company

Several years ago, after a decline in the company's revenue, a study was conducted based on information from competitors. Marketing agencies also analyzed the relevant industry for us. This allowed us to make an estimate of the total market volume, and then post a good commercial proposal on the site in order to avoid a decrease in sales. This offer could not only compete on equal terms with other companies in terms of pricing policy, but also included some additional services, which provided additional revenue for the enterprise:

• Different price range. To prevent a decrease in the company's revenue, we try to make the client an offer that will not only satisfy all his needs, but also match his financial capabilities. For example, we can build a house using the same technology in at least three different configurations. Among other things, each configuration can look different, as they say, for every taste and for the same money. And without reducing profits for us.
• Possibility of ordering additional services. For example, if the client expresses such a desire, the workers will be fully provided with accommodation at reduced prices at the facility during construction. The customer will not need to take care of the cabins for employees and the same electricity generator himself. All this he can rent from us at reduced prices.
• Simple and convenient presentation of information. The potential client is attracted not only by the quality and reduced prices, but also by the visibility of the offer. If you include in the presentation simple and concise explanations (and for those who are versed in the construction of customers - and diagrams of the main units), this ultimately will certainly affect the increase in the company's client base, and therefore its revenue. The reduced price to the buyer is a good deal for the organization.

By the way, after all these innovations, the company received twenty percent more orders than in the same period a year earlier.

Expert opinion

How to increase revenue by reducing the cost of services

Askar Rakhimberdiev,

CEO and co-founder of the My Warehouse service, Moscow

What will happen if one of the already discounted services is made free of charge for some time? We did just that.

True, to begin with, everything was carefully calculated. Prices for the services of our company varied in the range from 400 to 6 400 rubles per month. There were four tariffs in total. After the analysis, it turned out that the most reduced tariff in economic terms simply does not justify itself. There is such a concept as the value of customers - the total profit received by the company for the entire time of working with them. So, users who chose the lowest tariff brought the organization 27.5 times less profit than customers who ordered higher tariffs. And that is not all. Consumers of the lowest tariffs were four times more likely to refuse the company's services. Ultimately, the demand for the 400-ruble service stopped showing growth dynamics. That is, the decrease in sales from this tariff was absolute.

As already mentioned, the lowest tariff has become completely free. Those. a complete decline in sales. And it was available to absolutely everyone: both old clients and new ones. Sales were expected to decline by five percent. And this is only if people who pay for more expensive services do not decide to change them to free ones.

However, we took the risk of lower revenue in the hope of acquiring more customers. And then, having got used to our company, they can switch from a "zero" tariff to a more expensive one. The calculation was not based on a decline from scratch. The fact is that the free service is more suitable for very small companies, in a sense, it is even some kind of assistance to their growth. But when a company develops and "grows up", a small tariff becomes too small for it, and it is already necessary to switch to a larger one. That is, from a reduced tariff to a normal one.

There were two main ways to switch to a free plan. The first one is due to a decrease in income: do not advertise our innovations too much (for fear of losing "paid" clients who decide to retrain into "free" ones). And the second - on the contrary, to make information publicly available and even conduct an advertising campaign about changing the company's policy to reduce sales. We stopped on the second path: we updated the site, sent out an offer to the client base. The hopes for revenue were associated with the influx of new customers into the company, just from the number of website visitors who had not previously been our customers. The decline in income had to be offset by the number of users.

And the results were not long in coming:

• the number of registered visitors to the site increased by 23%;
• if earlier there were no companies on the free tariff at all, then after the reduction they became 600;
• the company's revenue curve shows growth every month: for six months, profit has not only not decreased, but increased by 12.5%.

And most importantly, even after the introduction of a free tariff into the company's services, the number of paying customers almost did not decrease - only by 1.5%. But the total revenue has grown.

Expert opinion

Increase the volume of revenue step by step

Daria Goryakina,

Director of the Retail Business Department of the "Helix Laboratory Service"

Several years ago, our company set itself the task of increasing its revenue.

It is best to act in such cases in stages:

• Increase in the number of repeat orders

For maximum revenue and for clients to come back to us again and again, we have added online medical consultations to the company's list of services, and not even at discounted prices, but absolutely free. Such a service became available to everyone who turned to any of the centers of the organization to get tested. The fact is that the test results from our diagnostic center can be received by e-mail, which is both quick and convenient. And along with the results, the client receives an offer to receive a free online consultation from a doctor, of course, immediately with the necessary link. Letters about the results of the analysis are read by everyone, without exception, and therefore the proposal catches the eye of everyone. As a result, 28 percent of our clients opened the website page and applied for this service of ours.

• Increased customer loyalty

There are two areas of work here:

• First, a prompt solution to the client's problem.

For this, there is a so-called feedback. You can go to our website or to your "personal account", call the call center and voice your wishes, suggestions or claims - and not even at a reduced rate, but absolutely free!

• Secondly, the use of bonuses for dissatisfied customers.

To settle conflict situations, the company has a special budget (30 thousand rubles every month), which is managed by the head of service quality control. Money can go to a wide variety of purposes. For example, someone can retake tests for free (including at home using our mobile service). Someone next time will be examined at a reduced rate (30 percent discount), while someone will simply be pleased with a small gift certificate or a token of attention in the form of a bouquet of flowers from the company.

• Changing the system of motivation

This part concerned primarily the company administrators. Previously, they had a rate of 180 rubles per hour, but now it is 100 rubles per hour. Revenues seem to have decreased, but bonuses have been added that directly depend on revenue. But that is not all. Company employees receive additional bonuses for offering complex services to visitors. Bonuses for attracting customers and their loyalty (50 percent of all bonuses) are awarded according to a special scheme.

• Increase in average check

Previously, the job of administrators was only to listen to the visitor and place the order he needed, even if at a reduced rate. There were no counter offers, and the vast majority of clients may simply not know about the entire list of services provided by the company. Let's say about the same online consultation or the possibility of a comprehensive survey. There was only one way out: for the sake of increasing revenue, to change both the form and the content of communication between administrators and clients. In this we were helped by a specially developed script program that automatically processes all available data about the visitor: age, gender, previously ordered studies and their results, many other factors, including, for example, pregnancy and current orders. After viewing the results of the analysis of the program, the administrator already knows approximately what other services or research will be of interest to the client. The decline in income has stopped.

• Project "Heroes"

In order to increase the company's revenue, we have established a new position, namely, the manager of the diagnostic center. Its task is to solve certain urgent problems, to control the work of administrators. Also, the manager reports to the superiors on the sales plan. But the main thing here is that a kind of connecting link has emerged between subordinates and management. As a result, the “staff turnover” decreased (up to 3%), while the planned profit in retail outlets, on the contrary, increased (up to 96%).

How to prevent a decline in sales revenue during a seasonal downturn in sales

• Development of special service offers

A good businessman should thoroughly prepare not only for the seasonal lull, but also for the onset of the so-called "high" season, ie. season of active sales. With the right approach to it, it will pay dividends in the future. Let's give one example. The high-end software company has lost revenue every year from the seasonal decline in sales in the summer, when many people go on vacation. What did the owners do? In the winter and spring months of high sales, they announced one interesting promotion. Its essence was as follows: subject to a certain amount spent on software in the summer, the buyer has the right to free training for one of the employees, but only in the summer. The offer was expected to interest many. As a result, the seasonal decline in revenue was not so noticeable. And the competitiveness of the company has increased significantly.

• Business diversification

Behind the complex name is a simple essence. If your business is directly dependent on the season, try at a “bad” time to reorient it to another, more profitable direction. For example, one owner of a chain of hotels on the Black Sea in the winter months housed workers in them, held various events. For example, alumni evenings, corporate parties, etc. There was a decline in revenue, but not catastrophic.

• Planning long-term projects

Prepare the sleigh in the summer and your advertising strategy in the winter. And best of all at the end of the year, given all the past shortcomings. Particular attention needs to be paid to future seasonal downturns and, as a result, lower revenues. Advertising will help here: both the old one and the new one, aimed at attracting new clients to the company. It would also be a good idea to try to develop activities in other markets during the forced downturn of the priority business. Income from the outside can “zero out” the decrease in revenue from the seasonal business.

• Market launch of new products

New products not previously manufactured by the company are also a good way to deal with the seasonal decline in revenue. Experts have calculated that the best time to launch new products on the market is January and July. As an example, we can cite the strategy of car dealers who, precisely in the months of the greatest decrease in profits, provide customers with the most favorable conditions for purchasing goods. Thus, they offset the seasonal decline in revenue.

• Assortment adjustment

The range of products must also be selected depending on the season. You must admit that in winter, the restaurant is more likely to order mulled wine and all sorts of hot drinks, and in summer - on the contrary, cocktails, necks or cold juice. It is the same in many other businesses. For example, massive flash mobs from advertising campaigns can be seen more often in the summer than in the winter in a thirty-degree frost.

• Short-term promotions and employee motivation

Decrease in revenue or its growth largely depends on the ordinary employees of the company. And if they are well motivated, then the increase in profits will not be long in coming. What can be done for this? For example, a competition for the best employee of the month. Or the simplest option is a good premium for the highest sales.

Expert opinion

How to prepare in advance for a seasonal downturn in sales

Valery Razgulyaev,

information manager of Izbenka and VkusVill companies, Moscow

The main thing here is an accurate and subtle calculation. There must be just enough (or close to) goods so that they do not deteriorate and at the same time can fully cover the needs of buyers. It should be remembered that in the off-season, certain products are consumed less, therefore, the supply should be equal to consumer demand. This is the ideal, of course. To do this, you need to work in three directions:

• Seasonality coefficients. Such ratios are used to determine the volume of the company's revenue in a specific month of the year. Based on the result of the calculations, you need to plan the quantity of the ordered goods. But these coefficients are a guideline only when the product delivery time is long. The calculation formula, expressed as a percentage, is as follows: the ratio of the amount of sales for a particular month to the average monthly amount of sales for the year. By the way, this formula for calculating the stock of a product is suitable both in the sales season and out of season. As for the short delivery time, it is best to focus on the sale of products in the last week or two.
• Stocks of seasonal and non-seasonal items. The calculation of reserves is done precisely with the help of seasonality coefficients. Here is an example of such a calculation. In April, 100 units were sold. one product and 50 units. another. We calculate the amount of basic products for May using the following formula:

quantity of goods in May = quantity of goods sold in April × (kn: kn - 1), where

kn is the seasonality coefficient in the last month of the season;

kn - 1 - seasonality coefficient in the penultimate month of the season.

• Timely advertising. With advertising, you don't have to wait until the last, that is, until the very seasonal recession. Consumers should know in advance that the store is about to expand its product range. However, at the very beginning of the season, advertising will also not harm, as, in fact, at the end of it - one way or another, and it is still advisable to sell the remnants of the product.

Information about experts

Timur Dasaev, General Director of the Dachny Sezon company. Timur Dasaev graduated from the Moscow State University of Civil Engineering (MISI named after V.V. Kuibyshev) and the Moscow State Technical University named after V.V. N.E.Bauman. He started his career at Mirax Group, participated in the development of large projects. He rose from an engineer to a site manager. In 2005 he became the head of the Dachny Sezon construction company. Dachny Sezon is a company founded in 2002. Scope of activity - low-rise suburban construction of frame houses and wooden cottages. The staff includes 20 people.

Askar Rakhimberdiev, General Director and Co-founder of the My Warehouse service, Moscow. LLC Logineks. Field of activity: trade automation, cloud services ("My warehouse" service). Territory: head office - in Moscow, branch - in Nizhny Novgorod. Number of staff: 35. Increase in turnover: 77% (in 2014).

Daria Goryakina, Director of the Retail Business Department of the Helix Laboratory Service. Daria Goryakina graduated from the Russian State University of Trade and Economics, received an Executive MBA degree from St. Petersburg State University. She began her career at Mobile TeleSystems, where she rose from a marketing specialist to a commercial director of a retail network. Since 2013 he has been working in his current position. "Laboratory service" Helix "was founded in 1998 in St. Petersburg. More than 170 diagnostic centers and laboratory points have been opened under the company's brand in Russia.

Valery Razgulyaev, information manager for Izbenka and VkusVill companies, Moscow. Graduated from the Moscow State Institute of Electronics and Mathematics (Faculty of Applied Mathematics) and the Institute of Economics and Finance (Faculty of Management). Over the years, he held the positions of analyst, marketer, logistician, head of departments. Conducts business trainings. Joined the company in 2011. Izbenka and VkusVill are a chain of stores of products for healthy eating. On the market since 2009. Today, there are more than 300 retail outlets in Moscow and the Moscow region.

In a dynamic economy, costs, demand, and competition are constantly changing. And businesses are forced to adjust their prices to these changes.
As practice shows, the most important reason for price changes is cost changes. Research has shown that 80% of surveyed businesses increase their prices as costs rise. And when costs are reduced, prices can be reduced, but not more than half the cost reduction. The second important reason for price changes is the price action of competitors. As for the reaction of enterprises to changes in demand, only 15% of the surveyed enterprises react with their prices to a significant change in demand and only 1% to any fluctuation in demand. As you can see, enterprises are more responsive to changes in the costs and price shares of competitors than to changes in demand, which is explained by the high uncertainty of demand and the difficulty of obtaining information about it.
The issue of price revision is of interest. Research has shown that businesses approach this issue in different ways. Some enterprises change their prices continuously, others at regular intervals, and still others once a year. As for the minimum and maximum sizes of price changes, each enterprise acts according to its own instructions providing for these sizes. Studies have shown that about 80% of surveyed firms limit the maximum increase in their prices to 15% or even less.
The decline in prices is generally seen as something unfavorable that must be compensated for. A decrease in prices by an enterprise can be caused by several reasons: the collapse of the market volume of the industry, the need to increase cash, underutilization of production capacities, a decrease in market share or the desire to increase its market share, the desire to maintain existing profits or increase it, the need to free warehouses from obsolete and outdated fashion products, the desire to expand the circle of buyers, the downturn in business activity, the trend in the development of alternative and related products, the actions of competitors.
The issue of price reductions is closely related to the cost structure. Products with a high proportion of fixed costs are more favorable for lower prices. A price reduction is justified if: it causes an increase in sales, unit costs are significantly reduced (due to fixed costs), the ratio between the number of potential buyers at a reduced price and the number
existing buyers will change in favor of potential buyers. However, it should be borne in mind that increasing sales can significantly reduce fixed costs per unit of production and make further price reductions unacceptable. If the share of variable costs in the cost structure is large, then the possibilities for flexible reduction in product prices are significantly limited. A decline in prices and an increase in sales will not result in a non-slow recovery in earnings here.
A manufacturer, when the price of his product is reduced, often faces such a problem as the “depreciation” of the product in trade. Trade often requires compensation because it views the enterprise's price reduction as a “costly price change”. The amount of compensation depends on which side the power is on. Most often, such compensation is in the form of a loan or an in-kind discount. The price reduction can be carried out not in monetary form, but in the form of an increase in the quantity of the product (for example, instead of reducing the price by 15% at a constant weight, the weight of the product increases by 15% at a constant price).
As for the announcement in the press about the planned price reduction, it should not be premature, as it will lead to a temporary delay in purchases by customers. To mitigate the need for significant price reductions for a particular product, an enterprise can simultaneously raise prices for other models that are characterized by low price elasticity. For price reductions to be profitable, they must be planned, which means that the enterprise must monitor changing market conditions and the actions of competitors.
The rise in prices, especially for vital products, components (intermediate) products, is a difficult problem for many enterprises. The main reason for the rise in prices is the rise in costs. To carry out the price increase more successfully, the practice recommends the following tactics, tricks, measures:
well in advance of the planned price increase date widely in the press about the increase in costs as a factor in the increase in prices. This action gradually prepares customers for the future increased price;
support price increases with increased advertising;
carry out a "tacit" increase in prices (ie, change prices in the price list);
choose such a moment to raise prices so that the reasons for the increase are obvious and plausible. Advance notification and timing of price increases cause a temporary upward shift in sales, as the current price for customers is lower than the future price. This trend is often so strong that it leads to an increase in short-term turnover;
link price increases with changes in product properties. If sellers focus customers on the quality of the product, then this distracts them to some extent from raising the price;
it is better to raise prices more often and on a small scale than rarely, but significantly;
instead of a nominal price increase, it is better to reduce the packaging of the product;
dividing the product into separate components (this was widely used in the 70s by computer firms as a substitute for nominal price increases). However, this practice cannot last long.
Price increases are easier to handle in make-to-order production, where each order is re-calculated. It is easy to raise the price if the order consists of a whole set of products (services). In this case, it is difficult for the buyer to compare the prices of a separate component of the order with the prices of similar products. In practice, when prices rise, attention is paid to the greater role of confidence in prices and their plausibility. In this regard, many talk about "price ethics".
The following aspects are also important for the successful implementation of the price policy.
Price-list. It can be presented to clients in various forms. Published and internal (confidential) price lists are the most important forms of price presentation to customers, in addition they play the role of offer prices and individual sales conditions. The price list to a small extent corresponds to the actual prices and forms the basis for the provision of discounts. The non-mediocre parameters of the negotiations include the size of the discount and the terms of sale. Price lists should, if possible, be printed separately from product documents.
In certain situations, it is important to deal with trust with price information (here the aspect of relations to the price of customers and competitors comes into play). The more the price is differentiated for individual customers, the better for the enterprise. Depending on the situation, it is necessary to carry out organizational measures to ensure customer confidence in prices.
It should be noted that the more complex the price system at the enterprise, the more difficult it is to understand prices not only for customers, but also for their own employees, who are forced to explain or justify prices to customers. Lack of knowledge about pricing among employees can be a serious bottleneck, an obstacle to the implementation of differentiation of the price system. Therefore, when introducing a new pricing system, it is worth considering whether the company's employees will be able to cope with the complexity of the pricing system. The opportunity to relieve the staff is provided by electronic data processing and the selection of favorable offer prices on this basis.

How to overcome the crisis. 33 effective solutions for your company Hamen Simon

Solution 21: how to cut prices right

During a crisis, the ability to regulate prices comes to the fore. “Today one of the most important questions is what to do with prices. During the growth period, it is not necessary to select the right price for a long and painful time. And now we can’t do without it, ”the observer said. Fortune Jeff Colvin. A prerequisite for correct pricing is an accurate understanding of the relationship between price and sales. This is especially important in times of crisis because the price-sales curve and price thresholds change.

Rice. 12. Reduction in sales and decrease in prices during the crisis

The most common and ineffective solution during a crisis is significant and premature price reductions, often in the form of large discounts. How can this be explained? In most cases, this is an attempt to maintain the current level of sales and employment. Take a look at fig. 12. Curve A illustrates the relationship between price and sales before the crisis. The sales volume was 1 million units at a price of $ 100. The income is $ 100 million. The unit variable costs are $ 60 million, and the fixed costs are $ 30 million, therefore, the profit is $ 10 million. How the crisis affected the price curve -sales? Let's say the curve B reflects the state of affairs during the crisis. Regardless of the price, sales fall by 20%. If the price remains the same at $ 100, sales will drop to 800,000 units. This significant reduction in sales prompts a desire to bring the price down to $ 90 to keep sales at 1 million units. This way you can save jobs. However, when it comes to profit, these two decisions - keeping the price at $ 100 or lowering it to $ 90 - have very different consequences. In the first case, when the price remains the same ($ 100), and the sales volume drops by 20%, the profit is $ 2 million.And if the price is reduced to $ 90 and the previous level of sales (1 million units) is maintained, then the profit will fall to zero.

So, it is more profitable to reduce the sales volume than the price. However, this is not enough to overcome the crisis. The next question is: how much should you reduce sales and / or price in order to get the maximum profit in the new environment? This question can only be answered with a price-sales curve. The CEO of a premium car manufacturer once asked the author of a book, "How many cars should I make to keep the current price?" To answer this question, you need to analyze the relationship between price and sales and calculate the price-sales curve. Several modern analytical methods can be applied that are effective even in times of crisis. The information you need can be collected in just a few days. The need to accurately define the sales price curve is shown in Fig. 13, which shows two curves similar at first glance. The graph on the left illustrates the example we talked about above (see Figure 12). Regardless of the price, sales fall by 20%. On the graph on the right, the curve A, which characterizes the situation before the crisis, is the same as on the left, but sales fall by 200,000 units (regardless of price), which means that the curve B parallel to the curve A.

Rice. 13. Different meanings of similar price-selling curves

If the price is $ 100, then in both cases we get the same sales volume. Due to the crisis, sales drop to 800,000 units. In order to maintain the same sales volume (1 million units), the price must be reduced: down to $ 90 on the left chart and only down to $ 92 on the right. The difference between the two seems to be minimal. However, in the first case (graph on the left), the maximum profit can be obtained by leaving the price the same ($ 100) and accepting a drop in sales of 200,000 units, or 20%. Compared to the initial situation, the profit falls from $ 10 million to $ 2 million. In the second case (graph on the right), the maximum profit can be achieved by reducing the price to $ 96, and sales by 10%, that is, to 900,000 units. Profit drops to $ 2.4 million. Although the curves are very similar at first glance, there is a huge difference between them - especially in terms of sales. The decrease in sales in the first case is twice as large as in the second. This simple example shows how important it is to calculate the sales price curve as accurately as possible. A misunderstanding of the situation or a miscalculation can lead to serious problems.

The views of two top executives in the auto industry show how different management's views on price and sales during a downturn are. In 2003, Richard Wagoner, CEO of General Motors from June 2000 to April 2009, said, “Our industry has incredibly high fixed costs. We knew that in times of crisis we would be more successful by lowering prices, not sales. After all, unlike some competitors, we still make money with this strategy. ” Wendelin Wedeking, CEO of Porsche, has a very different opinion: “We decided to stabilize prices to protect our brand and to avoid falling prices for used cars. When demand decreases, we reduce production volumes, and prices remain the same. " Wedeking said this a few years ago and during the 2009 crisis reaffirmed her words: “We know for sure that we will not flood the market with machines for which there is no demand. We will produce one less car than the market needs. "

Of course, General Motors and Porsche cannot be compared in terms of market position, costs and manufacturing flexibility.

However, I think everyone understands which company is better at coping with the crisis. Porsche is the most profitable car company in terms of bottom line, and in 2009 it acquired Volkswagen, which is 15 times its size. General Motors has been losing money for years. The difference in views between Wagoner and Wedeking points to a fundamental problem. During a crisis, sales will definitely decrease if the price is kept at the same level. However, this does not mean that sales will remain the same if the price is reduced. For two reasons. First, the sales-price curve falls during a crisis: at a given price, consumers buy fewer goods. Secondly, a price cut does not lead to the desired increase in sales, since competitors usually cut prices too, so the relative price remains practically unchanged. The hope of increasing market share and maintaining the same sales volume disappears. In times of crisis, as we discussed in Chapter 1, customers refuse to buy not because of high prices, but because of anxiety and a desire to save money for a rainy day. Reducing the price will not relieve consumers of anxiety, and to overcome their reluctance to spend money would have to reduce the price too much. This will lead to large losses and may even ignite a price war. And vice versa, the hope that it will be possible to completely avoid the decline in prices during the crisis is also unjustified.

If price reductions are unavoidable, the negative impacts should be minimized and the positive impacts on sales and profits maximized. It should be understood that the decrease and increase in prices cause different interests of the seller. When the price rises, it is more profitable for the seller so that the buyer does not notice this, then the sales volumes will remain the same. And when the price goes down, the seller is interested in the consumers paying attention to it, then the volume of sales will increase. Thus, when prices fall, the supplier must increase price elasticity by making customers well aware of the fall in prices.

Empirical research shows that the positive impact of lower sales prices is much greater when advertised, special displays, demos, etc. are communicated. While the positive impact on sales is huge in times of crisis, communications budgets tend to be cut. A dilemma arises: on the one hand, prices are falling sharply, and on the other, there is not much money left to inform consumers about this decline.

In addition to the general question of the advisability of reducing prices during a crisis, special attention should be paid to the scale of their reduction. The shape of the sales-price curve determines the optimal size of the price reduction. Curves (as in Fig. 13) show the optimal price change, which is as close as possible to the initial one. If we are talking about a more radical reduction or increase in prices, it is necessary to take into account the price threshold. In fig. 14 shows a sales price curve with price thresholds.

According to the curve A, which reflects the situation before the crisis, the high price threshold is $ 110, and the low one is $ 90. When the price goes beyond these thresholds, the impact of price changes on sales increases dramatically compared to the impact of price changes in the range from $ 90 to $ 110. within this interval, the price elasticity turns out to be much higher. How did the crisis affect the price thresholds? We already know that the sales-price curve is falling, that is, regardless of price, sales are falling. Moreover, price thresholds are also falling. If you look at the curve B, then we will see that the upper price threshold has dropped to $ 105, and the lower one - to $ 85.

Rice. 14. Price-selling curve with price thresholds

This new situation has disastrous consequences for prices during the crisis. The new optimum price can only be determined when the selling-price curve, especially the price thresholds, is well defined. In the example without price caps (see Figure 12), we saw that the optimal solution is to keep the original price. Profit will fall from $ 10 million to $ 2 million, and this will be the maximum possible profit in this situation. What will be the optimal price, taking into account the price thresholds indicated in Fig. fourteen? If the price is lowered within the horizontal section of the curve, sales will increase slightly and profits will drop sharply. For example, if the price were reduced to $ 90, the profit would be reduced to zero. The sales volume will only increase significantly when the price falls below the lower price threshold. Only in this case, increased sales compensate for the decrease in specific gross profit. However, this will only happen when the left part of the curve falls sharply.

This situation is shown in Fig. 13. The optimal price in times of crisis falls to $ 78. Sales volume increases by 1.8 million units. The price elasticity is very high at 5.7. The profit is $ 2.4 million.Although this is much less than the original $ 10 million profit, it is still more than the $ 2 million we would get if we kept the starting price of $ 100.

These calculations show that it is necessary to be very careful to reduce the price during the crisis. In our example, lowering the price to $ 85 degrades profit margins. Only when the price is less than the floor ($ 85) do sales increase enough to compensate for the lower profit margins caused by the low price. In practice, sales growth depends on how competitors react to early price changes. If they do not lower their prices, sales will increase, and if they do, then one can hardly expect a significant increase in sales. Our example also shows that very high price elasticity is needed at the bottom of the selling price curve to compensate for the decline in profits. Therefore, before drastically reducing the price, a company must determine the price elasticity of its products. Competitors' reactions also need to be considered. Otherwise, the whole initiative will end up leaving you with low prices and low sales.

The $ 3,250 German scrappage bonus is an example of a "move" to the lower end of the sales price curve that plummets. The program is designed to help the sales of 2 million new vehicles in 2009. Additional discounts from car manufacturers have resulted in a 40% price cut. The majority of the consumers who received the bonus are low-income people, so the significant price cut broke their resistance. Sales skyrocketed. However, the radical price cut in this case was based on significant government subsidies, so this strategy cannot be applied in other sectors where they operate under normal conditions. We emphasize once again that it is recommended to reduce prices with great caution during a crisis.

From the book Marketing the author Loginova Elena Yurievna

39. Marketing concept of price. Determining the Price Price is the most important element of the marketing mix. Firms do not just set a price, but develop a specific pricing policy. Historically, the price is the main factor determining the choice of the buyer.

From the book Marketing: Lecture Notes the author Loginova Elena Yurievna

6. Determining the price In the market, establishing the correct price for a product is a very complicated procedure, since the price level is influenced by many factors, such as: production costs, competitors' prices, prices of imported analogs, the level of demand, transport costs,

From the book Media planning for 100 the author Nazaikin Alexander

From the book More Money From Your Business: Hidden Methods to Increase Profits the author Levitas Alexander

From the book Marketing outside the Moscow Ring Road, or Confessions of a Marketer the author Razuvaev Sergey Alexandrovich

We keep the prices Winter was approaching the city and its real estate market. What is December psychologically? December is, of course, New Years. People take stock and make secret desires: get married, fly to Cyprus, but you never know. Or ... buy an apartment. And by the end

From the book Exhibition Management: Management Strategies and Marketing Communications the author Filonenko Igor

1.2. Price adjustment In practice, price adjustment uses a combination of the above methods, as well as additional options for changing a certain price level: price differentiation based on differences in the quality of available space or types

From the book Squeeze everything out of business! 200 Ways to Boost Sales and Profits the author

Price increase Very often you can safely raise prices by 3-5-7-10%. This will have almost no effect on the number of sales, but it will greatly increase profits. If you have not raised prices for a long time, this is the time to do it. As a rule, by increasing prices by 5-10%, and often by 15-20%, you will get a sharp

From the book Doubling Your Online Store Sales the author Parabellum Andrey Alekseevich

From the book Doubling Sales in the Wholesale Business the author Mrochkovsky Nikolay Sergeevich

"Floating" prices Surely you have come across goods in your life that are sold according to the principle "Today is more expensive than yesterday." This strategy works very well in the training business - the closer the date of the next seminar or training, the more expensive the ticket. What if

From the book Monetizing Business the author Merkulov Andrey

Raise your prices Raise your prices urgently! One of the biggest misconceptions, especially among aspiring entrepreneurs, is that the cheapest offer on the market is needed to effectively fight the competition. But often the easiest way to increase sales is to increase

From the book Leadership Development. How to understand your management style and communicate effectively with speakers of other styles the author Adizes Yitzhak Calderon

From the book Turbostrategy. 21 ways to improve business performance by Tracy Brian

From the book How to overcome the crisis. 33 effective solutions for your company by Haman Simon

Solution 24: Hold prices at all costs When price pressures increase, you can either “give up” or keep prices at the same level. There are many ways to deal with falling prices: better prepare for price negotiations; study the chain better

From the book Conscious Capitalism. Companies that benefit customers, employees and society the author Sisodia Rajendra

From the book Sales without problems. Going straight ahead the author Potapov Andrey

Raising the Price As discussed above, the simplest thing you can do to increase your profits is to raise the price of your product. Practice shows that in most businesses it is possible and even necessary to raise the price of products at least once every 3-4 months.

From the MBA book in 10 days. The most important program of the world's leading business schools the author Silbiger Steven

Reasons for the decline in sales

Ways to improve and develop a wholesale enterprise

Considering the tendency of turnover for the first four months of this year, we can say that the turnover of the enterprise has decreased by more than two times. In order to determine the reasons for this decline in orders, external and internal factors should be considered.

Seasonality of demand is one of the obvious reasons. The second is poor quality procurement work. The third is the lack of promotion, advertising.

If we compare the change in the assortment, then the number of commodity items not only did not decrease, it increased. Consider the trends in consumer demand for certain types of goods. So, for example, one of the permanent commodity items is stewed beef. This product was in demand in January, February, March. In April – May there was a sharp decline in sales of this product. A similar situation occurs with products that have a short shelf life or require low temperatures for storage. For example, oil sales dropped sharply, and the number of returns and write-offs from rejects increased.

The figure shows a graph of income from sales of certain types of oil. A sharp decline in sales can be observed in the second half of March, just the time of warming.

Τᴀᴋᴎᴍ ᴏϬᴩᴀᴈᴏᴍ, the formation of an assortment is one of the most difficult and time-consuming tasks of the trading enterprise in question. More or less successfully it was solved thanks to the experience of the managers involved in its formation. But the growing competition makes us take a more responsible attitude to the task of assortment formation.

At the same time, the formation of the assortment rests on one more task - the search for suppliers of goods at the most favorable prices. Very often there is a situation when it is not difficult to find a supplier or manufacturer of a product, and it is almost impossible to bargain to a competitive price. For this, responsible people should be engaged in the search and purchase of goods. It is also necessary to organize the procurement department in the most efficient way.

One of the tasks is finding customers. The considered enterprise solves this problem exclusively with the help of sales agents. There are undoubtedly advantages in this form. The company does not conduct any advertising. Underestimation of other types of promotion led to the loss of a large part of buyers at the time of a decline in consumer demand. The figure shows the dynamics of the emergence of new customers and the failure of old ones.

Agents are the only means of promotion. In the current situation of a competitive war in conditions of low demand, advertising should play one of the leading roles. Or the company must analyze and adjust the work of agents, increase the return on their work.

This happened as a result of the fact that retailers have become more careful about the procurement of goods. More stringent requirements for the quality and price of goods. At this stage, most wholesalers work with retailers solely upon delivery, which reduces the volume of goods purchased by retailers.

It is also necessary to revise the pricing policy of the enterprise. An analysis of the prices of competitive organizations showed that the prices at the enterprise in question are too high. Some goods are sold to shops at a price higher than in the market. This is the result of poorly developed pricing and procurement policies.

So, to get out of this situation, the enterprise must apply a number of measures aimed at increasing the turnover. One of the main steps should be to revise the assortment͵ to identify the most popular items and the goods necessary for the purchase. The revision of prices for goods is equally important. As for the procurement of goods, in this case it is extremely important to tighten the procurement policy. And one more of the weak points is the promotion of the company's services.