[Management Column Vol. 113] Case Study of Profit Increase through Product Repurposing
This is a column written by our representative, Kazuaki Sawada, detailing the insights he has accumulated in the field of business revitalization, management improvement, and bank relations.
The related link this time is "Is it possible to have increasing sales but no profits? Common causes in companies with declining gross profit margins." This article explains the importance of product differentiation and enhancing value propositions to customers in order to escape price competition.
Inquire About This Product
basic information
Please use this as hints for management decisions, such as building a management foundation, improving management quality, cash flow management, bank relations, business succession, and restructuring after the appointment of the second or third generation. If you have any questions or inquiries when putting this into practice, please feel free to contact us.
Price range
Delivery Time
Applications/Examples of results
By simply changing the "selling method" and "usage" of a product, profit margins can be significantly improved. Packaging material manufacturer T Company improved its contribution margin by about 17% over two years. They undertook three reforms. 1. Sell functionality, not just the product They focused on mid-sized and small food and confectionery manufacturers that were labor-intensive in "packaging operations," improved the ease of assembling paper boxes, and proposed the value of labor cost reduction to customers, resulting in widespread adoption by many companies. This was a result of maximizing the promotion of the functional characteristics of "paper." 2. Change industry norms They transformed the use of paper boxes from "something to wrap" to "something to use on-site." They converted products into items that can also be used as coolers or chairs and tables. This can be seen as a success born from a shift in thinking. 3. Develop new markets They proposed turning non-paper items into paper (100% paper products). They replaced traditionally metal or plastic products with paper, creating new uses. The key is not to sell the product itself, but to sell the value that customers can gain. A change in usage perspective leads to a departure from price competition and improvement in profits. Next time, we will discuss "management based on limitation."
Company information
Our company is a group of professional consultants who value practical insights born from responding to corporate needs. With practical management know-how and a strong belief, we solve management challenges and achieve everything from startup support, reconstruction and revitalization support, growth expansion support, and business continuity support to building a solid management foundation.
