When you do a research on the cost structure of an industry, the first thing for you is to identify the stages at which you add value to your product or service.
A product-oriented business will have the following stages:
a) Procurement
b) Processing
c) Fabrication
d) Assembly
e) Distribution
f) Marketing.
Each step adds additional value to the final product. A service business, of course, would not have the “fabrication” and “assembly” steps shown above. Most trade associations have information regarding production and marketing costs for respective industries.
