Increasing Profitability for a Clothing Manufacturer Facing Price Pressures
Category
Increase Profitability
Challenge
Our client, a clothing manufacturer, was struggling with declining profit margins due to competition from cheaper imports and lower-priced products in the market. Despite cost-cutting measures, the impact on their bottom line was minimal. They sought our expertise to diagnose the underlying issue and recommend actionable steps to boost profitability without compromising quality.
Approach
We conducted a thorough assessment of the client's product portfolio, focusing on price competitiveness and the profitability of each product line. To better understand consumer price tolerance, we implemented a price sensitivity measurement, analyzing which products could sustain a price increase without losing customer demand and which lines needed price reductions to remain competitive.
However, our deeper analysis uncovered a key issue that extended beyond pricing. We identified that the brand’s limited market presence and low awareness were hindering sales growth. While some products were priced appropriately, the brand was not reaching enough potential customers to drive higher sales volume.
With this insight, we devised a dual approach: first, strategically adjusting prices across different product lines to maximize profit margins; second, addressing the brand awareness gap through targeted marketing efforts to increase visibility and, consequently, demand for higher-margin products.
Result
