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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

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• Spring '10
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