Product elimination

From product elimination when companies remove their products from the production range. Without such an elimination, the range would continue to grow, which in the long term would have a negative impact on the competitiveness and profit of the company.

Definition / explanation

The term product elimination describes the final removal of products from a company's so-called sales program. The respective product is either completely or only partially withdrawn from the market. The latter is the case if, for example, the sale of the product is stopped.

Durch die daraus resultierende Verringerung der Absatzmenge kann infolgedessen eine Reduzierung der Manufacturing costs erreicht werden. Um sich auf Basis von stichhaltigen Gründen für eine Produktelimination zu entscheiden, haben sich Unternehmen im Lauf der Zeit einigen Verfahren als unterstützende Maßnahme angeeignet.

Process of product elimination

In addition to ROI and ABC analyzes, Product life cycle- and portfolio method applied. The results obtained from the individual tools form the basis for the decision as to whether a product is to be removed from the market or left there for a further, fixed period of time.

Further methods of product elimination:

  • Life cycle analysis
  • Portfolio analysis
  • ABC analysis
  • Contribution margin analysis
  • ROI analysis
  • Scoring analysis

Quantitative as well as qualitative reasons

Basically, product elimination is based on both quantitative and qualitative reasons.

Quantitative reasons

  • falling sales
  • total sales are reduced by a specific product

Qualitative reasons

  • Demand for a product has decreased
  • Company performance is declining
  • too high marketing costs
  • too high production costs for a product
  • legal restrictions
  • Damage to image through a product

Summary

  • Removal of the product from the product range and thus from the market
  • partial or complete removal of the product is possible
  • there is a difference between qualitative and quantitative product elimination
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