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11 Examples of Product Rationalization

 , updated on October 06, 2017
Product rationalization is the process of reviewing the products and services of a firm to make a decision to retire, consolidate, maintain or improve each. The following are common examples of product rationalization criteria.

Margins

The profitability of unit sales.

Volume

Sales volumes. A low volume unit may be a needless distraction, particularly if it doesn't add to your customer experience and brand.

Overhead

The overhead costs that are associated with the product or service. For example, a product that requires a great deal of research and development to stay relevant in a competitive market.

Inventory Impact

A product that is tying up capital or space in your supply chain.

Production Impact

A product that is tying up your production lines. When a firm has many products production is often viewed as an opportunity cost where producing one item means you can produce less of another.

Sustainability

The environmental or community impact of a product or service.

Brand

The impact of a product or service on your brand. For example, an unprofitable product that is a symbol of your brand legacy.

Customer Experience

Considering a product or service in respect to the end-to-end customer experience. For example, an optional valet service at a hotel that doesn't generate profits directly but may attract customers.

Risk

The risks associated with a product or service such as reputational or legal risk.

Quality

A product that is poor quality as compared to your other products. May damage your brand or have high support costs.

Competition

A product or service that faces increased competition such as the launch of a product with better performance and lower price than your costs.
Overview: Product Rationalization
Type
Definition
The process of reviewing the products and services of a firm to make a decision to retire, consolidate, maintain or improve each.
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