Kevin Appleby discussed how strategic revenue segmentation can provide valuable insights for business strategy and decision making. Highlights include:
– An example from the plastics industry showed how improperly segmented revenues led to unprofitable segments going unnoticed.
– Tools for segmenting revenues include analyzing by product, customer, geography or other groupings to understand profitability and growth.
– Porter’s Five Forces framework can help estimate growth potential in different market segments.
– Segmentation informs strategic choices around what areas of the business to continue investing in, start new initiatives, or stop underperforming segments.
– Accurately understanding variable costs that drive different segments is key to making well-informed decisions.
