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The article seeks to assist managers in low‐margin markets to grow profitability by applying principles of profit leverage.

The paper identifies a series of principles for targeting market segments and growing profits.

Gross margins are usually taken for granted by managers, but are actually key indicators of the types of marketing strategies – what the author calls “gross profit strategies” – that managers should use to leverage the growth of gross profit. Two general classes of gross profit strategies are identified – volume‐driven, and price/bundling gross profit strategies. The latter is particularly applicable to managers in low‐margin markets. The paper also discusses four subsidiary gross profit strategies and illustrates with examples of real‐world firms and situations.

The paper defines market‐driven costing and stresses the importance of measuring “true” gross margins, by measuring costs based on the cost to serve the customer, including opportunity costs. Finally, the paper explicates the relationship between true gross margins and managers' perceptions of their competitive ability to compete in the marketplace.

Compares the gross margins on a range of retail business categories across six European Community countries and the USA, using data derived from official national statistics. Results show that the USA had the highest gross margins for most comparable categories, followed by Britain, and Ireland had the lowest margins in nearly every category. These margin differences did not have a strong correlation with GDP per head of population. Discusses several limitations of both the data and their interpretation. Argues that gross margin as a percentage of retail sales is a useful comparative measure of the gross cost of the retail function. Queries the relevance of the output measure value added to micro‐economic analysis, in the context of increased externalization of services and labour.

Revisits the strategic resource management (SRM) model, a framework that was developed 20 years ago as a managerial tool for performance measurement and integrated decision making in retailing. Shows certain modifications to the SRM model, focusing on the gross and net margin return on retail space (i.e. GMROF and NMROF) as the key metrics. Authors contend the new focus gives the SRM framework a firmer grounding conceptually, and makes the SRM model more directional in practice. The paper also extends the SRM framework from its traditional gross margin metrics to net margin. Authors believe the greatest benefits of the SRM framework continue to be in benchmarking, planning, and executing alternative inventory, space, and people strategies in an integrative fashion.

The authors assess the development potential of cowpea beyond grain in local markets in Mali by: (1) identifying trader types and types of cowpea products sold; (2) examining trader roles; (3) estimating gross margins and their determinants; and (4) discussing policy opportunities to further develop the value chain.

The authors analyze data collected through observation and semi-structured questionnaires from 487 sellers in 26 markets, including market, seller, and product characteristics. The authors also calculate gross margins and conduct a regression analysis to identify influential factors.

The authors identify several types of cowpea sellers in local markets, including processor-retailers, retailers of fresh leaves and fodder, and grain retailers, collectors and wholesalers. Women dominate the marketing of processed products and fresh leaves. The marketing of boiled cowpeas offers retailers higher margin rates compared to fritters and pancakes. Grain sellers, who are mostly men, have lower margins but sell larger quantities. Processor-retailers bring more value to the cowpea value chain. Specialization of the seller in cowpea, regional location of the market and day of the market fair all influence gross margins.

Future work should explore consumer preferences for different types of cowpea products.

This study of the cowpea value chain in Mali has revealed the multidimensional character of the cowpea plant, which goes far beyond its grain and highlight the important roles played by women.

The interaction between public policy, retail structure and conduct has been well debated but a paucity of empirical evidence exploring the interrelationships exists. This paper examines the impact of one policy measure, retail pricing legislation, on retail conduct. It focuses on the experience of the Republic of Ireland, which has had a ban on below‐cost selling of certain grocery products since 1988. OLS regression of quarterly data on a basket of 13 grocery product categories over the period 1984‐1994 identifies legislation as a key influence on retail conduct and as a significant variable in the explanation of retail gross margins. Evidence is found to support a positive relationship between the prohibition of below‐cost selling and retail gross margins indicating a reduction in price competition within the category. Per capita incomes, retailer concentration and retail advertising are found to be significant but negatively related to retail gross margins.

This paper aims to investigate the performance effects of an incentive plan that links buyers' compensation to financial measures, namely sales and gross margin, in the retail industry. It seeks to examine the issue using field data obtained from the 3C (computers, communications, and consumer electronics) company, the largest electronics chain store business in Taiwan.

In addition to t‐tests, the authors use a multiple regression model to examine the impact of the buyer incentive plan on purchasing performance.

It was found that the gross margin return on inventory investment (GMROI), the most critical purchasing performance measure in retailing, deteriorated after implementing the incentive plan. Further analysis showed that although sales and gross margins increased as a result of the plan, the benefits were completely offset by a significant decrease in inventory turnover.

This study has two limitations. First, the case study involved a specific retail chain. Thus, the extent that the results can be generalized to other organizations or other industries has yet to be explored. Second, to obtain a more comprehensive dataset and more observations, procurement team data was used instead of individual buyer data to measure the purchasing performance.

Managers should be aware of possible negative impacts when they design incentive plans, e.g. dysfunctional behavior among employees.

An incentive plan should incorporate all critical components related to buyer performance if there is to be improvement in terms of the key performance measures. The paper contributes to the literature by providing empirical evidence about the appropriateness of the performance measures used in buyer incentive plans designed for the retail industry.

The purpose of this study was to contribute to merchandising theory development by testing and refining Rupe and Kunz’s Volume per Stock‐keeping unit for an Assortment (VSA) and Assortment Diversity Index(ADI), using multiple merchandising performance measures. Behavioural Theory of the Apparel Firm with a Quick Response construct (BTAF/QR), was used as the theoretical framework for the study. The data were generated by a computer simulation of the merchandising process called Sourcing Simulator. Statistical analyses included Pearson correlation coefficients and regressions. The VSA had significant correlations with all 14 merchandising performance measures (p < 0:001), and the ADI was a consistent indicator of financial productivity considering all 14 merchandising performance measures. The results of the study supported the proposal of additional assumptions as well as propositions and hypotheses related to merchandising responsibility for BTAF/QR.

This paper aims to analyze the impact of the cost coefficient of product emission reduction, coefficient of low-carbon product advertising effort cost, and sharing ratio of low-carbon product advertising effort cost on the profit of a dual-channel supply chain. After determining the best model and relevant influencing factors, the paper puts forward corresponding management inspirations and suggestions.

The paper opts for an exploratory study using Stackelberg game theory to construct a centralized decision-making (MC mode), a low carbon product advertising effort cost free sharing decentralized decision-making (SD model) and a low carbon product advertising effort cost sharing decentralized decision-making (JD model) game model. Through using optimization methods to get the equilibrium solution, the relevant management suggestions are obtained by comparison analysis.

The paper shows that the JD model is better than the SD model in terms of the profits of the manufacturer, retailer and supply chain, and the improvement of Pareto is realized. The proportion of cost sharing of low carbon product advertising effort is positively related to the wholesale price and direct influence coefficient of low carbon product advertising effort on channel, while negatively related to the retail price and the cross influence coefficient of low carbon product advertising effort on alternative channels. Under the JD model, the manufacturer can reduce advertising costs through improving the efficiency and pertinence of direct channel advertising and urging the retailer to do a better job in sales management to improve gross margin and require the retailer to increase advertising efficiency and pertinence of retail channel to reduce advertising costs of retail channel and other ways to increase their profits. The retailer can make use of its advantages closer with consumers to improve the efficiency and pertinence of advertising in the retail channel to raise the influence coefficient of advertising and reduce the advertising cost in the retail channel.

The innovations of this paper are listed as follows: First, it has considered advertising investment from both the manufacturer and the retailer simultaneously. Second, it has considered a low-carbon background to investigate cooperative advertising decision for low-carbon products. Third, it has considered the decision on the level of product emission reduction and the level of low-carbon product advertising effort investment simultaneously.

The relationship between functional participation and several measures of channel member financial performance are evaluated. Channel theory suggests that greater participation in channel functions should be positively associated with channel member compensation. Support for the theory was found for gross margins and total operating expenses. However, return on assets were not found to be positively related to channel function participation.

Strategy Question: How do I understand my customers’ “willingness to pay” for my products or services?

Summary: We know our value proposition and what we are charging for our products or services. Are they in line? If not, a firm could be leaving money on the table on every sale, or conversely not even be asked to quote an opportunity. This tool helps to compare price, cost, and margin against the perceived value for each product/service form in key market segments. This tool will help to align the value proposition with the pricing structure. By comparing competitive pricing against the strengths defined by the value proposition, an understanding of customer’s willingness to pay can be defined.