Reference Case:-- Basic Quantitative Analysis for marketing Low – Tech Marketing Math

1. Application of Marketing Math
Reference Case:--
Basic Quantitative Analysis for marketing
Low – Tech Marketing Math (Harvard Business School)
Presented by:--
Aritra Banerjee (23/008)
Saakshi Nayak (23/028)

2. Cost - Revenue Analysis
For the purpose marketing analysis of any product or services we need to have to determine :--
 Price
 ( cost + margin)
 Volume
 Distribution ( selling and distribution cost)
 Competitive forces

3. Cost- Types
1. Fixed cost : Remains constant irrespective of volume of production or sales
a. Total fixed cost (TFC) TFC= K (K: constant)
b. Average fixed cost ( TFC/ number of units produced or sold)
k
Pic source : http://www2.owen.vanderbilt.edu

4. Cost- Types
Variable cost: a cost that varies with the level of output.
VC= f(q)
Amosweb.com

5. Total Cost
Total Cost = Total Fixed Cost + Total Variable Cost = k + f(q)
Economics .about.com

6. Revenue and Profit
Sales (revenue) xxxxxxx
Less: Variable cost (xxxxx)
Contribution xxxxxx
Less: Fixed Cost (xxxxx)
Profit/loss xxxxxx
Economics .about.com

7. Break Even Point
 The break-even point (BEP) is the point at which total cost and total revenue are equal.
 There is no profit no loss
 An indicative tool which helps in making marketing strategies.
Mathematically represented as:--
Break Even Volume = Total fixed cost
contribution per unit

8. ISO Profit Curve
2500
2000
1500
1000
500
2 4 6 8 10
Variable cost
ISO curve: same level of profit at every
point of the curve.
volume
price

9. Selling And Distribution Margin
 Manufacturer’s margin($3.50) = Manufacturer's selling price to distributers($7.5) -
manufacturing cost($40)
 Wholesalers margin($1.20) = Wholesalers selling price to retailers($8.70) - price paid to
manufacturer($7.50)
 Retailer’s margin = Retailer's selling price to consumers($10.00) - price paid to
wholesales($8.70)