A company has been delivering a global product that no longer appears profitable. Senior management’s best response is to:
A. analyze product profitability by market segment.
B. discontinue the product based on eroding profitability.
C. provide additional incentives to the sales force.
D. increase promotional activity across all markets.
Answer: A
Explanation:
Context: A global product is no longer appearing profitable, requiring senior management to take action.
Options Breakdown:
A. Analyze product profitability by market segment: This involves examining which segments of the market are contributing to profitability and which are not, providing insight into targeted strategies to improve or discontinue specific segments.
B. Discontinue the product based on eroding profitability: This is a drastic measure that may overlook profitable segments.
C. Provide additional incentives to the sales force: This may not address the underlying profitability issues and could increase costs.
D. Increase promotional activity across all markets: This could be costly and ineffective if the product is fundamentally unprofitable in certain segments.
Correct Answer Justification: By analyzing product profitability by market segment, senior management can make informed decisions on whether to focus efforts on more profitable segments, adjust strategies, or discontinue specific segments.
Reference: Marketing and profitability analysis literature
Case studies on strategic decision-making for product lines
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