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Department
Marketing
Course
MKT 300
Professor
Cynthia Mason
Semester
Fall

Description
S2 S8 Wholesale margin : (Wholasale price- Manuf price) / Wholesale price Or wholesalemargin: wholesale markup/(1+wholesale markup) Retail margin : When to use it (Retail price – Wholesale price) / Retail price What effect does one have on the other? Formula: Wholesale price: =Manuf price*(1+Wholesale margin/(1-wholesale margin)) =CORREL(B76:B100,C76:C100) OR =Retail price*(1-retail margin) How to read it OR using Markup: (Manuf price* (1+Wholesale markup))= wholesale price Wholesale Markup %= (Wholesale margin/(1-wholesale margin)) r ~ 1= extremely high positive correlation between the measures. r ~ zero =no correlation. Ex) 0.20 very weak positive relationship. Mark-up on manufacturer's price= (1+importer mu)*(1+wholesale r ~ -1 =extremely high, inverse/-ve mu)*(1+retail mu) – 1 relationship btwn measures: one is high, the other is low. Ex)correlation S3 coefficient of 0.7 ^2 is Sub% explains 58% of profit margin% CONTRIBUTION *Draw graph to find outler* S1 Forecast market size Current market size x (1+ Forecast Expected Sales quantity in units: exp [mkt size x mkt share] market growth) Variances between expected (sometimes called Forecast market share Old+new standard costs) and actual costs and prices are called Contribution Variances (or price-variable cost Forecast sales volume Forecast market size* Forecast market share variances). Variance: Actual- expected Or old +New *Fixedcosts:Expected –actual Total contribution Old+new Ex) Marketing program costs or Manufacturing & general overhead costs Cont. Price/cost variance: Diffference between Pretax profit contribution- market fixedcost- market share * Actual market size* Exp CM manuf fixed cost – O/H OR Old Market share variance: : Diffference between +new market size * exp market share* Exp CM Market size var: Diff btwn sales in quantity x ROI pretax profit/investment exp CM Estimated product item share of Old+new Total var = CM+MKT SHARE + MKT SIZE + FC var. growth S6 Gain or loss to competitors Old+new Rate of return: IRR(Investment:Last CF) Npv 1 CF: npv(rr,cf1-end) Total rev Old+new NPV Multi cf: npv(rr,cf1-end)+ cf 0 [Beginning of year 2, all past costs are sunk and common to whatever action you take next. You should not consider the Marketing fixed costs Old+new $400,000 and first year performance. All you should consider is the return from investing another $100,000 , which is $150,000 in Year Manufacturing fixed costs Old+new 2 and 3. What is the shareholder NPV of this further investment of $100,000 at the beginning of year 2?] S5 Allocated OH Old+new Forecast market size: Current market size x (1+ Forcast market growth) Forecast market share: Forecast sales volume/ Forecast market size Pdown Sup 1/(CM%/p% - 1)Pup Sdown 1/(CM%/p% +1) Forecast sales volume: Current market size * ( Current share+ gain +Cannibalism) + current Score Card: market size*forecast market size*forecast market share Translating Vision and Strategy – Four perspectives: - Financial - Internal Biz Processes - Learning new product contribution = marginal cont.= (combined-old) & Growth - Customer - Objectives, Measures, Targets, Initiatives Pretax profit(old): contribution- market fixed cost-manuf fixed cost – O/H Measuring and Managing Metrics ROI: pretax profit/investment 1. Learning and Change Measures 2. Key Internal Biz Processes S7 Measures 3. Customer Outcome Measure 4. Owner Outcome Measures When customer retention rate is 100% Don’t touch the numbers. =NPV(RRR,CF1:CFend) Role of Marketing: To maximize shareholder value by delivering profitable When there is customer retention rate is 75% growth and building brand equity. Leave CF1. Start multiplying each orginal CF next with 0.75. Extra .75 for next CF and so on. Revenue Less direct variable costs S4 Break-even volume = Fixed Costs/Contribution margin Equals contribution margin (CM) Break-even dollar sales = Break-even volume*Price Less direct fixed costs Target volume: Total fixedcosts and assets employed and target dollar Equals gross profit/margin Less
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