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Product Profit Analysis Using Data

The document analyzes data from a new product launched by a company to determine if it is meeting profit goals. Figures 1-3 show that both the profit goal and cost of goods sold have been decreasing throughout the year, with the cost of goods consistently exceeding the profit goal. A table further indicates that the profit goal of 25% of cost of goods sold has not been met, as the profit goal is 19.23% of cost in all months. Therefore, the analysis finds that the new product has not achieved its target profit levels.

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50 views6 pages

Product Profit Analysis Using Data

The document analyzes data from a new product launched by a company to determine if it is meeting profit goals. Figures 1-3 show that both the profit goal and cost of goods sold have been decreasing throughout the year, with the cost of goods consistently exceeding the profit goal. A table further indicates that the profit goal of 25% of cost of goods sold has not been met, as the profit goal is 19.23% of cost in all months. Therefore, the analysis finds that the new product has not achieved its target profit levels.

Uploaded by

Arrow Analytica
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

1

Analyzing a New Product

Student Name

Department, University

Course Number: Course Name

Tutor

Due Date
2

Importance of Data Analysis

Data analysis is the science of analyzing primary data to make inferences about the data.

Data analysis is essential to every business because it improves customer service, helps in

predicting customer behavior, and helps in decision-making (Ghelber, 2020). In this scenario, the

investigator uses data analysis to make decisions about a product. When you have data to refer

to, making business decisions becomes more comfortable since they are backed by facts. With

analyzed data, one can see what works well and what needs to be improved or eliminated. If one

product is generating target profits, a company might want to invest more resources, energy, and

time into producing more or improving it. If a company struggles to generate desirable earnings

from a product, the product can be discontinued. All these decisions can be made using analyzed

data. The investigator wishes to use data to determine if a new product the company has

launched is meeting the expectations. The company’s profit aim is 25% of the cost of goods sold

(COGS).

Figure 1 displays the clustered column chart that compares the profit goal against the cost

of goods sold to gain a rough insight into how the profit performs against the COGS. A clustered

column chart compared values across a few categories, thus giving the investigator a

comprehensive view of what is happening in the data. The values are profit goal and COGS, and

the categories are the months.


3

Results of the Analysis

FIGURE 1: Profit Goal


$5,000.00
$4,500.00
$4,000.00
$3,500.00
$3,000.00
$2,500.00
$2,000.00
$1,500.00
$1,000.00
$500.00
$0.00
Jan Feb Mar Apr May Ju n Ju l Aug Sep Oct Nov Dec

The profit goal has been decreasing throughout the year (Figure 1).

Figure 2: Cost of Goods


30,000.00

25,000.00

20,000.00

15,000.00

10,000.00

5,000.00

0.00
Jan Feb Mar Apr May Ju n Ju l Aug Sep Oct Nov Dec

The cost of goods has been decreasing throughout the year (Figure 2).
4

Figure 3: Profit Goal vs COGS


Profit Goal Cost of Goods
23,920.00

23,920.00

23,920.00
23,920.00

18,460.00

18,460.00

17,095.00

17,095.00

17,095.00

17,095.00
17,095.00

17,095.00
$4,600.00

$4,600.00

$4,600.00

$4,600.00

$3,550.00

$3,550.00

$3,287.50

$3,287.50

$3,287.50
$3,287.50

$3,287.50

$3,287.50
Jan Feb Mar Apr May Ju n Ju l Aug Sep Oct Nov Dec

According to Figure 3, the cost of goods sold is greater than the profit goal from January

to December. It also shows that, as the year progresses, the COGS and corresponding profit goals

decrease. The table below indicates whether the profit goal is 25% of the cost of goods sold

(COGS). In data visualization, tables are about precision, allowing the investigator to dive deeper

into the numbers and explore exact values rather than focus on visualizations and

approximations. Even though the clustered column chart showed us a visual representation of

what is happening in the data, it does not show the exact values.

Table 1 Is the Profit Goal 25% of COGS or Not

Month Profit Goal Cost of Goods 25% or Not


Jan $4,600.00 23,920.00 19.23%
Feb $4,600.00 23,920.00 19.23%
Mar $4,600.00 23,920.00 19.23%
Apr $4,600.00 23,920.00 19.23%
May $3,550.00 18,460.00 19.23%
Jun $3,550.00 18,460.00 19.23%
Jul $3,287.50 17,095.00 19.23%
5

Aug $3,287.50 17,095.00 19.23%


Sep $3,287.50 17,095.00 19.23%
Oct $3,287.50 17,095.00 19.23%
Nov $3,287.50 17,095.00 19.23%
Dec $3,287.50 17,095.00 19.23%
Annual Numbers $45,225.00 235,170.00 19.23%

In Table 1, it can be noted that in all the months plus the annual numbers, the profit goal

is just 19.23% of the cost of goods sold. The profit goal is short of the target by 5.77%.

The Influence of the Target Audience

The target audience influences the way information is displayed. Most target audiences

do not understand the data analysis jargon and would like results to be reported in a non-

technical, concise, clear, and straightforward manner. The investigator should be able to report

the results in a layman’s language. The investigator remembered that the readers may not be

lacking in intelligence but are unfamiliar with the data analysis terminologies and techniques.

Therefore, the data analyst made the analysis and interpretation as simple as possible.
6

References

Ghelber, A. (2020). The Importance of Data Analysis in a Business | By Alon Ghelber. Tealfeed.

[Link]

Common questions

Powered by AI

Failing to reach the desired profit goal of 25% relative to COGS could have several implications, including financial strain due to insufficient profitability, potential cutbacks in investment or resources, and strategic shifts needed to address the underlying issues. The company might need to reassess its cost structures, marketing strategies, or product offerings to align more closely with profit expectations .

Making business data analysis understandable to a non-technical audience is important because it ensures that all stakeholders, regardless of their technical background, can engage with and make informed decisions based on the data. This inclusivity can drive better company-wide strategies, as decisions are made collectively with a comprehensive understanding of the data insights .

The company's profit aim is 25% of the cost of goods sold (COGS), but the achieved profit goal is consistently 19.23% throughout the year. This indicates that the profit goal is short by 5.77% relative to the target, falling short of the desired profitability benchmark .

A business might adjust its strategies by revisiting its cost reduction techniques, reevaluating its pricing structure, enhancing marketing efforts to boost sales, or pivoting its product lineup to better align with consumer demand. This also includes conducting a thorough analysis of market trends and consumer feedback to innovate and differentiate product offerings which could potentially improve profitability relative to COGS .

The consistent shortfall in achieving a profit goal of 25% of COGS could be due to several factors, such as pricing strategies, cost management inefficiencies, or market conditions affecting sales volumes. These require deeper investigation into the cost structures, pricing models, and competitive landscape the company operates within, which may not have been adequately addressed through standard strategies alone .

Using both visual and tabular data provides a comprehensive analysis framework. Visual data such as charts offer intuitive insights into trends and discrepancies at a glance, enhancing data comprehension for strategic discussions. Tabular data, meanwhile, allows for detailed examination of exact values and percentages, crucial for precise decision-making and confirming insights drawn from visual representations .

Data visualization, such as clustered column charts, provides a visual representation of data trends, helping stakeholders quickly comprehend how a business is performing over time. It contrasts with tables that provide precision, allowing for an easier comparison of profit goals against COGS across different months, thus lending insight into trends and variances in business performance .

The target audience significantly influences how data analysis results are presented. As most audiences might not be familiar with technical jargon, it is imperative to report findings in a simple, straightforward manner that is easy to grasp. This involves distilling complex analyses into clear, concise insights, ensuring comprehensibility across stakeholders with varying levels of expertise .

Data analysis is critical in business decision-making as it allows the company to make informed decisions based on factual evidence. It helps in understanding which products are performing well, predicting customer behavior, and adjusting strategies accordingly. For instance, if a product is meeting profit targets, the company might invest more resources in it. Conversely, if a product underperforms, the data can inform a decision to cease production .

Interpreting figures from data visualization requires understanding the specific criteria of analysis – such as determining the baseline profit goals compared to actual performance metrics. Recognizing what the charts and tables represent in terms of trends, outliers, or average values is crucial. Hence, effectively interpreting visual data involves both analytical skills and a comprehension of the context in which the data was collected and presented .

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