Your SlideShare is downloading. ×
0
Chapter 2 Financial Aspects of Marketing Management
Variable and Fixed Costs <ul><li>Variable Costs </li></ul><ul><li>uniform per unit of output, within a time frame </li></u...
Relevant and Sunk Costs <ul><li>Relevant Costs </li></ul><ul><ul><li>occur in the future </li></ul></ul><ul><ul><li>differ...
Gross Margin Total Gross Margin Dollar Amount Percentage Net Sales $100 100% Cost of Goods Sold -  40 - 40 Gross Profit Ma...
Trade Margin Suppose a retailer purchases an item for $10 and sells it at $20. Retailer Margin as a percentage of cost is:...
Trade Margin Unit Cost of Goods Sold Unit Selling Price Gross Margin as a Percentage of Selling Price Manufacturer $2.00 $...
Contribution Analysis <ul><li>Break-even point is the unit or dollar sales at which an organization neither makes a profit...
Contribution Analysis <ul><li>Break-even Analysis </li></ul>Unit break-even volume =  total dollar fixed cost unit price -...
Unit Volume Dollars 0 Break-even Analysis Chart Loss Profit Total Revenue Fixed Cost BE Point Total Cost Variable Cost
Applications of Contribution Analysis <ul><li>Sensitivity Analysis </li></ul><ul><li>Profit Impact </li></ul><ul><li>Marke...
Upcoming SlideShare
Loading in...5
×

Financial aspects of marketing management

1,158

Published on

Financial aspects of marketing management

Published in: Business, Economy & Finance
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
1,158
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
40
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Transcript of "Financial aspects of marketing management"

  1. 1. Chapter 2 Financial Aspects of Marketing Management
  2. 2. Variable and Fixed Costs <ul><li>Variable Costs </li></ul><ul><li>uniform per unit of output, within a time frame </li></ul><ul><li>fluctuate in proportion to output </li></ul><ul><li>Fixed Costs </li></ul><ul><li>remain constant within a time frame </li></ul><ul><li>per unit cost decreases with increase in output </li></ul><ul><li>programmed costs (e.g., marketing expenses) </li></ul><ul><li>committed costs </li></ul>
  3. 3. Relevant and Sunk Costs <ul><li>Relevant Costs </li></ul><ul><ul><li>occur in the future </li></ul></ul><ul><ul><li>differ among alternatives being considered </li></ul></ul><ul><li>Sunk Costs </li></ul><ul><ul><li>occurred in the past </li></ul></ul><ul><ul><li>mostly irrelevant to future decisions </li></ul></ul><ul><ul><li>sunk cost fallacy </li></ul></ul>
  4. 4. Gross Margin Total Gross Margin Dollar Amount Percentage Net Sales $100 100% Cost of Goods Sold - 40 - 40 Gross Profit Margin $ 60 60% Unit Gross Margin Unit Sales Price $1.00 100% Unit Cost of Goods Sold - 0.40 - 40 Unit Gross Profit Margin $0.60 60%
  5. 5. Trade Margin Suppose a retailer purchases an item for $10 and sells it at $20. Retailer Margin as a percentage of cost is: $10 / $10 x 100 = 100 percent Retailer Margin as a percentage of selling price is: $10 / $20 x 100 = 50 percent
  6. 6. Trade Margin Unit Cost of Goods Sold Unit Selling Price Gross Margin as a Percentage of Selling Price Manufacturer $2.00 $2.88 30.6% Wholesaler 2.88 3.60 20.0 Retailer 3.60 6.00 40.0 Consumer 6.00
  7. 7. Contribution Analysis <ul><li>Break-even point is the unit or dollar sales at which an organization neither makes a profit nor a loss. </li></ul><ul><li>At the organization’s break-even sales volume: </li></ul><ul><li>Total Revenue = Total Cost </li></ul>
  8. 8. Contribution Analysis <ul><li>Break-even Analysis </li></ul>Unit break-even volume = total dollar fixed cost unit price - unit variable cost Contribution Margin = unit selling price - unit variable cost unit selling price
  9. 9. Unit Volume Dollars 0 Break-even Analysis Chart Loss Profit Total Revenue Fixed Cost BE Point Total Cost Variable Cost
  10. 10. Applications of Contribution Analysis <ul><li>Sensitivity Analysis </li></ul><ul><li>Profit Impact </li></ul><ul><li>Market Size </li></ul><ul><li>Performance Measurement </li></ul><ul><li>Assessment of Cannibalization </li></ul>
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×