Shared experienced models: The Pims Approach

Shared experienced models: The Pims Approach

The PIMS (profit impact of marketing strategy) project began in 1960at general electric as an intra firm analysis of the relative profitability of the business.

It is based on notionĀ  that the pooled experiences of diverse successful and unsuccessful businessĀ  will provide useful Insights and guidance about the determinants of business profitability.

Shared experienced models

By the term business, we mean a strategic business unit which is an operating unit selling a distinct set of products to an identifiable group of customers in competition with a well defined set of competitors. By the mid-1980the pims database of about 100 data items per business included about 3000businesses from about 450 participating firms.

-Firms participating in the pims program receive PAR reports for their business which compare its actual return on investment and return on sales .
-The pims predict for that business (based on its market and strategic characteristics). This type of analysis showing the deviation of actual ROI from the PAR ROI, yields insights into how well and why the business has met its strategic potential. Another useful output from pims is the limited information report. this model contains only 18 variables ,which can be assessed using a subset of the total data required for PMS.

-Some market characteristics associated with high profitability.
-A growing market
-Early life cycle
-High inflation
-Few suppliers
-Small purchase levels
-Low unionization
-High exports/low imports

Factors of profitability

-High market share
-Low relative costs
-High perceived quality
-Low capital intensity
=Intermediate level of vertical integration

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