A product elimination (including product elimination) is the removal of a product from the production program . Without product elimination, the range would become more and more extensive. That would have fatal consequences for the company's competitiveness and profit. This is particularly true of:
- old products in the degeneration phase,
- new products, especially flops.
The following criteria can be applied when checking whether a product should be eliminated:
- How high is the contribution margin ? (Carry out step contribution calculation)
- How high is the sales share of the product in the total sales?
- What is the turnover rate of the inventory?
- What is the market share ?
- How does the product affect the environment?
- Does the product represent an important addition to the range?
- Are other products dependent on this product? ( Composite effect )
- What associations does the product evoke?
- What service guarantees do I have?
Elimination candidates can be identified using the following methods:
- Life cycle analysis
- Portfolio analysis
- ABC analysis
- Contribution margin analysis
- ROI analysis
- Scoring analysis