About 5000 4750 5250 about 6500 6250 6750 about 8000

▪ About 5000 (4750 – 5250)
▪ About 6500 (6250 – 6750)
▪ About 8000 (7750 – 8250)
o
Solving:
▪ Profit = [Q * (P – VC)] – FC
▪ At breakeven, the profit = 0
▪ P = 100
▪ VC = P * (1 – M)
▪ VC = 100 * (1-60%) = 100 * 40% = 40
▪ FC = 400,000
Next
▪ Profit = [Q * (P – VC)] – FC
▪ 0 = [Q * (100 – 40)] – 400,000
▪ 0 = 60Q – 400,000
▪ 400,000 = 60Q
▪ Q = (approx.) 6,666
o
iClicker: Is this profit potential?

Exam 1
▪
Loss $250 M
▪
Profit $100 M
▪
Profit $250 M
▪
Profit $400 M
▪
Profit $500 M
o
Solving:
▪
Profit = [Q * (P – VC)] – FC
▪
Q = 60M * 35% = 21 M
▪
P = 500
▪
VC = 450
▪
FC = 800 M
Next
▪
Profit = [Q * (P – VC)] – FC
▪
Profit = [21M * (500-450)] – 800 M
▪
Profit = [21M * 50] – 800M
▪
Profit = 1050M – 800M
▪
Profit = 250 M
⇒
Breakeven Example “Exam Question”
o
Imagine you are raising money for your sorority/fraternity.
o
You have created a calendar that has Columbia-related photographs that
your sorority/fraternity members took.
o
You have two options:
▪
Option A: sell a 12 page black and white calendar, a separate
month on each page. You can sell between 100-500 calendars. You
will charge $10/calendar. Your variable cost is $5/calendar and
your fixed cost (the set up fee) is $100
▪
Option B: Sell a 6 page calendar, two months of each page. You
will sell 100 calendars. You can charge $20-30/calendar. Your
variable cost is $10/calendar and your fixed cost is $200
o
The Data:

Exam 1
Option A Option B
Quantity 100-150 100
Price $10 $20-30
Variable Cost $5 $10
Fixed Cost $100 $200
o
Calculation: (for Option A, the least profit)
▪
Profit = [Q * (P – VC)] – FC
▪
Q = 100
▪
P = 10
▪
VC = 5
▪
Profit = [100 * (10-5)] – 100
▪
Profit = 400
o
Note: You need to do each calculation for each, find the lowest cost
Truncated Consumer Behavior (not in textbook) (9/18/2018)
•
The Consumer Decision Process
⇒
Evaluation of Alternatives: Attribute Sets
o
Automobile example
▪
Universal: all car brands
▪
Retrieval: Honda Accord/Toyota Camry/Ford Fusion/Nissan
Altima
▪
Evoked: Honda Accord/Toyota Camry
•
iClicker: Jonathon prefers shirts made with 100% cotton, but he will sometimes buy
shirts with less cotton if they are less expensive. Jonathon uses ______ to decide which
shirts to buy
⇒
a compensatory decision rule
⇒
a non compensatory decision rule
⇒
a habitual decision making
•
Factors Influencing the Consumer Decision Process
⇒
Marketing Mix
o
Product
o
Price
o
Place
o
Promotion

Exam 1
⇒
Psychological Factors
o
Motives/Goals
o
Attitudes
o
Perceptions
o
Learnings
o
Lifestyle
⇒
Social Factors
o
Family
o
Reference Groups
o
Culture
⇒
Situational Factors
o
Purchase/Shopping Situation
o
Temporal State
•
Consistency Across the 4 P’s
⇒
The product must be consistent with place; and both should be consistent with the
positioning/targeting segments