Profit Pools

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Focusing managers and companies on profitable market segments. Explanation of Profit Pools of Gadiesh and Gilbert. ('98)

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  2. Forum
  3. Best Practices
  4. Expert Tips
  5. Resources
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What are profit pools? Description

The Profit Pools method of Orit Gadiesh and James L. Gilbert is a strategy model that can be used to help managers or companies focus on profits, rather than on revenue growth. The idea behind it is: managers need to look beyond revenues to see the shape of their industry's profit pool. In this way strategies can be created which result in profitable growth.


Orit Gadiesh and James L. Gilbert, consultants at Bain & Co. presented the following definition of Profit Pools in their HBR article "Profit Pools: A Fresh Look at Strategy" (May 1, 1998): the total profits earned at all points along the value chain of an industry. Companies that see what others do not see, will be best prepared for capturing a disproportionate share of the profits in an industry.


Although the concept is simple, the structure of Profit Pools is usually quite complex. The pool will be deeper in some segments of the value chain than in others, and depths will vary within an individual segment as well. For example, the profitability of a segment may vary widely by customer group, product category, geographic market, and distribution channel. Moreover, the pattern of profit concentration in an industry will often differ from the pattern of revenue concentration.


Usage of the Profit Pool model

  • Identify new sources of profit.
  • Rethink the role of a company in the Value Chain.
  • Refocusing a company on its traditional sources of profit.
  • Make product decisions, pricing decisions and operational decisions.

Profit Pools Forum
  Where Can I Find a List of Current Industry Profit Pools?
Many people speak of profit pools, but where can I find them in the U.S. and internationally? Is there a list some place?
I would be especially interested in time dated snapshots by geographic location. For example, in many developed countries t...
     
 
  Profit Pool versus Centre
Is a profit pool the same as a profit centre?...
     
 
  What is Profit ? FIT
Profit is all about being FIT enough to run the business. FIT Stands for:
F - Financial Fitness
I - Intellectual Fitness
T - Technological Fitness
In Hindu culture we have 3 godesses for these 3 areas:
Finance - Lord Lakshmi...
     
 

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Best Practices - Profit Pools Premium

Expert Tips - Profit Pools Premium
 

How to Challenge the Existing Strategic Logic

A Blue Ocean Strategy-tool Kim and Mauborgne are describing is the "Four Actions Framework"....
Usage (application): Discovering Uncharted Profit Pools
 
 
 

Identifying Profit Pools

Examples of Profit Pools can be found in various industries:
- The U.S. automotive industry encompasses many value chain activities, from the man...
Usage (application): Profit Pools, Increasing Profitablity, Horizontal Diversification
 
 

Resources - Profit Pools Premium

Marketing Strategy: Opportunity Analysis; Targeting and Segmentation

Presentation about Market segmentation, target marketing and opportunity analyses. The presentation includes the following sections:
1. Overview<...
Usage (application): Marketing Strategy, Target Marketing, Market Segmentation
 
 

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Compare with Profit Pools: Relative Value of Growth  |  Business Process Reengineering  |  GE Matrix  |  BCG Matrix  |  ADL Matrix  |  Core Competence  |  STRATPORT  |  SWOT Analysis  |  Benchmarking  |  Product Life Cycle  |  Bass Diffusion Model  |  Industry Change  |  Positioning


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