Strategy consultants are often engaged to analyze company profit and find ways to improve it. This slide deck contains data-driven charts that help to explain company profit and to present approaches for profit improvement. The slides in this solution toolkit will provide charting and data presentation ideas you can adopt for your own work. Each chart is presented on two slides. The first contains an example of how the chart is used. The second contains an explanation of the chart and information on how to create it. All charts are created using Mekko Graphics; and you can copy, edit, and reuse them in your own presentations.

1. PROFIT IMPROVEMENT
ANALYSIS
David Goldstein
President, Mekko Graphics
david@mekkographics.com

2. Introduction
• Strategy consultants are often engaged to analyze company
profit and find ways to improve it
• This slide deck (presentation) contains data-driven charts that
help to explain company profit and to present approaches for
profit improvement
• The slides in this solution toolkit will provide charting and data
presentation ideas you can adopt for your own work
• Each chart is presented on two slides
• The first contains an example of how the chart is used
• The second contains an explanation of the chart and information on
how to create it
• All charts are created using Mekko Graphics; and you can copy,
edit, and reuse them in your own presentations
2

3. Value Chain Profit Pool
The vast majority of coffee profits go to the parts of the value chain with the
greatest revenue—coffee processing and coffee shops.
U.S. Coffee Industry
Source: Gottfredson and Schaubert, The Breakthrough Imperative, Collins, 2008

4. Bar Mekko Charts for Profit Pool Analysis
4
U.S. Coffee
Industry
• Bar mekko charts can be used to compare profit margin with market size.
• The area of each segment is proportional to its profit
• Profit pools divide up profits across the industry’s value chain from raw materials to
consumption.
• This bar mekko allows you to quickly identify the highest margin and highest
total profit segments of the value chain.
• Extra credit: Using two bar mekkos allows you to compare profits over time.

5. Comparing Profitability with Competitors
5
The largest competitors in the cellular market have profit in-line with their market share. The
three niche competitors have relatively higher profit for their size and share.
Source: Gottfredson and Schaubert, The Breakthrough Imperative, Collins

6. ROS/RMS Chart Compares Profitability
with Competitors
6
• The ROS/RMS (Return on Assets/Relative market Share) chart compares competitor profitability
with market share. The normative band highlights the fact that increased share typically leads to
higher profit.
• You can spot competitors that have profits that are relatively high when compared to their
market share by looking at bubbles that are above and to the left of the normative band.
• For more information on calculating RMS see: http://en.wikipedia.org/wiki/Relative_market_share

7. Product Line Profitability
The highest margins come from hot coffee and iced drinks. Food and brewed
coffee are reducing company profits.
Source: Fabricated data presented to illustrate the chart type.

8. Bar-Mekko Charts for Product Line
Profitability
• Bar-mekkos can show profitability by product line, plant, channel or region.
• The bar-width are sales, heights are profit margin and areas of each bar
correspond to operating profit.
• Bar-mekkos can show product lines that have either profits or losses

9. Sales Versus Profits
9
Iced and hot coffee drinks are the largest product lines and account for a
disproportionately large share of total profits.
Source: Fabricated data presented to illustrate the chart type.

10. 100% Stacked Bar to Compare Sales and
Profits
10
• Use a 100% stacked bar with a column for revenue and one for profits to compare
the profitability of different product lines, regions, or channels
• You can identify which product lines contribute a relatively larger percentage to
profits than to revenue (e.g., iced drinks, hot coffee drinks and merchandise).
• Note: all product lines must have positive profits to use this chart.

11. Profit by Product Line and Competitor
11
My Company and its 4 largest competitors account for over 80% of the profits
in each major personal insurance product line.
Source: Fabricated data presented to illustrate the chart type.

12. Profit by Product Line and Competitor
12
• Use a Marimekko chart to show how industry profits are distributed by competitor
and product line (or customer segment or channel).
• The chart highlights the level of profit concentration and the relative profit by
product line of the major competitors.
• Note: all competitor by product line profits must be positive to create the chart.

13. Customer Segment Profitability
and Growth
13
Large consulting and private equity firms represent the highest growth and high
profit customer segments.
Source: Fabricated data presented to illustrate the chart type.

14. Bubble Chart for Customer Segmentation
14
• Use an XY linear bubble chart to segment your customers based on profitability
and growth.
• This will help you target the customer segments that will be the most profitable for
you currently and in the future.
• Use the horizontal and vertical segment lines to divide your charts in high and low
growth and profit quadrants.

15. Profit Improvement Plan
15
Implementing the profit improvement plan will double profits in three years.

16. Cascade Chart for Presenting Profit
Improvement
16
• Add a cascade chart to show the potential impact of the profit improvement plan you
have developed.
• Start with current year profit, add a bar for each proposed improvement, and
conclude with projected future profit
• Add a data row to note the priority of each proposed improvement.

17. Learn More
To learn more about creating persuasive charts, download the free
Mastering Chart Selection Guide, which includes a 30-day trial of the Mekko
Graphics software.
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