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Lecture 5

MKT100- WEEK 5 LECTURE .docx
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Department
Marketing
Course
MKT 100
Professor
Mary Foster
Semester
Winter

Description
MKT100 MARY FOSTER WEEK 5: February 13, 2013 Metrics: Contribution Margin: What is left over after you covered your variable costs Pays for fixed cost Unit: Each unit or percentage How to conceptualize it: A+B=C C= 100% 100% - A = B 100% - B = A Variable costs (A) + Contribution margin (B) = Selling Price or Revenue (C) If variable costs were 70% of the revenue, $14, what is the selling price? 14 / 0.7 = 20 Remember Acme Coach Company VARIABLE COSTS: $ 60 Raw materials and components
 + $240 Labour (6 labour hours @ $40/hour) $300 Total Variable Cost per Unit MONTHLY FIXED COSTS: $600 Rent
 $100 Insurance ($1200 / 12 months) + $300 Salary $1000 Total Fixed Costs per Month ONE TIME FIXED COSTS: $1000 Crane + $2500 Tooling + $12, 000 FC / year $3500 Total One Time Fixed Costs Contribution Margin = Selling Price – Variable Costs A + B = C 300 + B = 450 B = $150 Contribution Margin % = CM ($) / Revenue x 100 $150/$450 x 100 = 33.3% If Acme sells 100 buses per year? Total fixed costs per year = $12,000
 Total fixed one time costs (capital investments) = $3500 IMPLICATIONS??? MIS- Sales Data 4 different venues .. All things being equal, the data should be indentical If not, look for why its not, what is it about this specific price that makes things different? Wolfville and Spring Garden difference: Lunches MKT100 MARY FOSTER WEEK 5: February 13, 2013 - Spring garden makes its money there - Why doesn’t Wolfville do the same thing? - Different demographics, location, menu, population density, number of competitors, quality of the food Don’t have a hypothesis -> exploratory MIS – Tracking Price Perceptions Descriptive – longitudinal You are not testing a hypothesis, just describing whats going on Done over time, and the same opinion persists MIS –Brand Development Descriptive –Cross sectional Different age groups, segmented by age What does this tell you about Crispy Crunch? Identical to the market Particularly more popular with 12+ years old By the time the decision, the decision is made in the hands of the buyer and consumer Result: good standing Quantitative Research About getting feedback Qualitative Research Deeper understanding Follow it. Dif
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