This type of analysis is based on the Pareto principle, according to which 80% of the company’s total income comes from the 20% most popular products. The method allows you to determine the share of the total sales of various types of products as a percentage.
Sales efficiency This type of analysis is based on the Pareto
ABC analysis is especially useful for retail organizations, since it country email list can be used to identify product groups with the highest and lowest profit margins.
For the analysis, it is necessary to determine
the sales volumes by product, and also calculate the share of each product in the final sales results. Then it is necessary to sort by decreasing share, and then calculate the total share as a cumulative total, that is, the share of each subsequent product in total with the shares of the previous products. For example:
Total share of product 3 = share of product 3 + shares of products 1 and 2
Let’s look at an example using a table. As a result of calculations, This type of analysis is based on the Pareto all goods will be divided into three groups:Group A includes goods in the greatest demand, which bring from 0 to 80% of profit;
- Group B contains goods of moderate demand, which bring in less profit (from 81 to 95%);
- Group C consists of unprofitable goods that need to be removed from the assortment (from 95 to 100%).
For example, a company sells five products, but their share in the total profit by monthly sales is difficult to estimate, since the data changes from month to month. Conducting an ABC analysis will show that group A includes only products 3 and 2, and it is better not to work with product 4 at all.
XYZ Demand Analysis
This method allows you to determine product categories that have methods of finding and attracting clients” stable demand from consumers. Analysis of demand constancy helps to predict the effectiveness of sales of goods and services and to plan: the stronger the fluctuations, the more difficult it will be to bring the sales of a given product to planned indicators in the future.
Source: shutterstock.com This type of analysis is based on the Pareto
To conduct the analysis, you need to create a list of all products and their sales volumes by month. After that, you need to find the variation coefficient, which shows how demand can change.
The formula for calculating the coefficient manually is difficult to use, but it is easily configured in Excel:
Coefficient of variation = Standard deviation / Mean for all months × 100%
Depending on the coefficient of variation, products fall into the following categories:
- Category X — coefficient below 10%. There is a stable demand numbers lists for these products, so you can accurately plan the quantity of goods. It will not run out unexpectedly and will not lie in the warehouse;
- category Y — the coefficient is within 10-25%. Demand for goods changes depending on the season, advertising, sales, etc., so