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HW5%20Lecture%20Coverage%20From%20Class

HW5%20Lecture%20Coverage%20From%20Class - Another Look at...

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Another Look at Profits Net Profit = Revenues - Expenses Revenues = Unit Volume x Price Per Unit = Market Demand x Market Share x Price Per Unit Expenses = Variable Expenses + Fixed Expenses Variable Expenses: = Unit Volume x Variable Cost Per Unit = Market Demand x Market Share x Variable Cost Per Unit Fixed Expenses: Marketing Expenses + Operating Expenses
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Another Look at Profits (cont.) Net Profit = (Market Demand x Market Share x Price Per Unit) – (Market Demand x Market Share x Variable Cost Per Unit) – Marketing Expenses – Operating Expenses Pull Out Like Terms…. Market Demand x Market Share x (Unit Price – Unit Variable Cost) – Marketing Expenses – Operating Expenses
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Net Marketing Contribution Dropping the last term (operating expenses) we get Net Marketing Contribution (NMC), the components of profitability that are under control of marketing…. Net Marketing Contribution (NMC) = Market Demand x Market Share x (Unit Price – Unit Variable Cost) – Marketing Expenses (Fixed)
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Market-Based Strategies Related to Profitability
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