Normative decomposition of the profit bridge into the impact of changes in marketing variables

Tim J. Smith ()
Additional contact information
Tim J. Smith: Wiglaf LLC

Journal of Revenue and Pricing Management, 2021, vol. 20, issue 5, No 2, 530-545

Abstract: Abstract A set of definitions and equations for measuring the impact of changes in quantity sold, price, variable costs, and mix between two time periods on the business’s profitability are provided. The recommended decomposition of the changes in profit is then compared with four other seemingly rational decompositions using hypothetical two-product firms. The comparisons demonstrate the importance of using a proper decomposition in constructing a measurement of the impacts of changes in quantity sold, price, variable costs, and mix on the profitability over other formulations and prior art. This normative decomposition of the profit bridge measuring the impact of changes in marketing activities is used as part of the intelligence mosaic in executive and investor decision-making.

Keywords: Profit bridge; Margin analysis; Analytic modeling; Attribution; Measurement (search for similar items in EconPapers)
Date: 2021
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1057/s41272-020-00278-8 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:jorapm:v:20:y:2021:i:5:d:10.1057_s41272-020-00278-8

Ordering information: This journal article can be ordered from
https://www.palgrave.com/gp/journal/41272

DOI: 10.1057/s41272-020-00278-8

Access Statistics for this article

Journal of Revenue and Pricing Management is currently edited by Ian Yeoman

More articles in Journal of Revenue and Pricing Management from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().