MathSessionStudents

MathSessionStudents - Basic Marke Arithm tic ting e...

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Marketing Management Dr. Ning Li Basic Marketing Arithmetic A real situation : Mark Green has just become product manager for Brand X. Brand X is a consumer product with a retail price of $1.00. Brand X and its direct competitors sell a total of 20 million units annually; Brand X has 24% of this market. Variable manufacturing costs for Brand X are $0.09 per unit. Fixed manufacturing costs are $900,000. The advertising budget for Brand X is $500,000. The Brand X product manager’s salary and expenses total $35,000. Salespeople are paid by a 10% commission. Shipping costs, insurance, and so forth are $0.02 per unit. (1) What is the unit margin for Brand X? (2) What is Brand X’s break-even volume? (3) What market share does Brand X need to break even? (4) What is Brand X’ s profit?
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Marketing Management Dr. Ning Li The Drivers of Profit Profit Sales Revenue Cost _ Sales Volume (Units) Price Variable Cost Fixed Cost Variable Unit Cost Sales Volume X X
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Marketing Management Dr. Ning Li Fixed Cost v Fixed costs : Those costs that remain at a given level regardless of the amount of product produced and sold.
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Marketing Management Dr. Ning Li Variable Cost v Variable cost: Costs that change depending upon the amount of product produced and sold. v Often in marketing case studies the variable cost per unit will be given. v Example: We sell a chair to wholesalers at a price of $100, and the variable manufacturing costs of one chair are $30. In addition, it costs us $3 per chair to ship the chairs to wholesalers, and we pay a 5% commission to our salespeople ($5 per chair). The total variable cost associated with each chair is _________
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Marketing Management Dr. Ning Li Margin (1) v Unit Margin = Unit Price – Unit Variable Cost If it’s clear from the context, we sometimes drop the “unit” part and simply call this the margin. (also called unit contribution, markup, markon.) In the chair example, the margin is ______
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MathSessionStudents - Basic Marke Arithm tic ting e...

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