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UST Notes > Marketing > Flashcards

Marketing Flashcards

1
Q

Calculating Margin

A

Selling Price = Cost to Produce + Margin
SP = Cost + Margin
Margin = Customer’s Purchase Price - Cost to Produce or Acquire
Margin = SP - Cost
Margin (%) = Selling Price (100%) - Cost (%)

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2
Q

Margin %

A

Margin % = (Selling Price – Cost) / Selling Price
% Margin = (SP – Cost) / SP

% Margin = $ Margin / SP

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3
Q

Calculating Selling Prices Across the Channel

A

Selling Price = Cost / (1 - % Margin)

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4
Q

Calculating Selling Prices Across the Channel - Chaining Backwards

A

Cost (or supplier selling price) = Selling Price * (1 - % Margin)

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5
Q

Price Def

A

Revenues = Units Sold x Price.

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6
Q

Unit Market Share

A

Unit Market Share = Unit Sales / Total Market Unit Sales

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7
Q

Revenue Market Share

A

Revenue Market Share = Sales Revenue / Total Market Sales Revenue

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8
Q

Market Penetration

A

Market Penetration = Customers who purchased a product in the category /
Total population

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9
Q

Relative Market Share

A

Relative Market Share =
Brand’s Market Share ($ or Units) /
Largest Competitor’s Market Share ($ or Units)

*Note that this is equivalent to Brand Sales / Largest Competitor Sales

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10
Q

Total Costs

A

Total Costs = Total Fixed Costs + Total Variable Costs

Total Costs = FC + VC = Fixed Costs + (Unit Var. Cost * Units Sold)

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11
Q

Unit Variable Cost

A

Unit Variable Cost = Total Variable Costs for 1 Unit of Production

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12
Q

Total Variable Costs

A

Total Variable Costs = Unit Variable Costs * Units Sold

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13
Q

Average Costs

A

Average Costs = Total Costs / Units Sold

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14
Q

Total Revenues

A

Total Revenues = Selling Price * Units Sold

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15
Q

Total Contribution

A

Total Contribution = Total Revenues – Total Variable Costs

Total Contribution = Unit Contribution * Units Sold

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16
Q

Profit (or Loss if negative)

A

Profit (or Loss if negative) = Total Revenues – Total Costs

Profit = Total Contribution – Fixed Costs

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17
Q

Unit Contribution

A

Unit Contribution = Selling Price per unit – Variable Cost per unit

Unit Contribution = SP per unit – VC per unit

Note: Unit Contribution is significant because it measures a net inflow of funds to a company as additional units are sold.

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18
Q

Contribution Margin %

A

Contribution Margin % = Unit Contribution / Selling Price per unit

Contribution Margin % = Contribution / Selling Price

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19
Q

Breakeven

A

total revenues = total costs (Variable and Fixed)

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20
Q

Two types of breakeven analysis

A

Unit Breakeven = How many unit sales need to be made to cover fixed costs?

Revenue Breakeven = What level of sales are needed to cover fixed costs?

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21
Q

Unit Breakeven

A

Unit Breakeven = Fixed Costs / Unit Contribution

Unit Breakeven = Fixed Costs / (Selling Price – Variable Cost)

BE (units) = Fixed Costs / (Selling Price – Variable Cost)
or Fixed Costs / Unit Margin

22
Q

Revenue Breakeven

A

Revenue Breakeven = Fixed Costs / Contribution Margin %

Revenue Breakeven = Fixed Costs / (Unit Contribution / Selling Price)

BE ($) = Fixed Costs / ((Selling Price – Variable Cost) / Selling Price)
or Fixed Costs / Margin %

23
Q

Converting Breakeven

A

Revenue Breakeven = Breakeven in units * Unit Price

Breakeven in Units = Dollar Breakeven / Unit Price

NOTE: With either measure it is simple to calculate the other, using price to convert.

Revenue Breakeven = Breakeven in Units * Unit Price

Breakeven in Units = Revenue Breakeven / Unit Price

24
Q

Target Profit Breakeven

A

Target Profit Breakeven = (Fixed Costs+Target Profit) / Contrib Margin %

25
Q

cannibalization rate

A

The Big Block cannibalization rate would be calculated as follows:

= (Regular Umbrella purchasers opting for Big Block) / (Total Big Block
sales)

26
Q

Weighted Cannibalization Rate

A

Big Block Sales: 50
Cannibalization Rate 60%
Regular Umbrella Unit Contribution: $10
“Cannibalized” Regular Unit Contribution: $6 (= 60% x $10)
Big Block Unit Contribution: $15
Weighted Big Block Unit Contribution: $9 (= $15 - $6)
Marginal Big Block contribution: $450 (50 units x $9
weighted margin)
Original Regular Umbrella Total Contribution: $1,000 (100 sales x $10)
Lois’ Total Monthly Contribution: $1450

27
Q

Fair Share Draw

A

‘Fair Share Draw’ assumes that a new entrant to a marketplace will take
share from his competitors in direct proportion to their existing market
shares. Total market remains at 500 sales.
That means that Larry will take:
From Sue: 80% market share x 500 total sales x 10% cannib. rate = 40 sales
From Dave: 20% market share x 500 total sales x 10% cannib. rate = 10 sales
Therefore, the new market shares will be:
Sue: 400 – 40 = 360 sales, 72% market share
Dave: 100 – 10 = 90 sales, 18% market share
Larry: 50 sales, 10% market share

28
Q

% Repeat
Purchasing
Customers

A 
% Repeat
Purchasing
Customers 
= 
Awareness
Rate 
X
Availability
(ACV %)
 X
Trial
Rate 
X
Repeat
Purchase
Rate
29
Q

Forecasted
Number of
“Triers” (#)

A 
Forecasted
Number of
“Triers” (#)
=
Awareness
rate (%)
X
ACV (%)
X
Trial
rate (%)
X
Target market
size (#)
30
Q

Forecasted Trial

Volume (#)

A 
Forecasted Trial
Volume (#)
=
Number of
Triers (#)
X
Units per
Trial (#)
31
Q

Repeat

Volume (#)

A 
Repeat
Volume (#)
 = 
Repeat
rate (%)
X
“Triers”
(#)
X
Repeat
purchases
per period (#)
X
Units per
repeat
purchase (#)
32
Q

Forecasted

Volume (#)

A 
Forecasted
Volume (#)
=
Trial
Volume (#)
\+
Repeat
Volume (#)
33
Q

Forecasted

Volume

A 
Forecasted
Volume
=
target
customers
X
awareness
rate
X
ACV
%
X
trial
rate
X
(
units/trial
purchase
\+
repeat
rate
X
repeat
purchase/year
X
units/repeat purchase
)
34
Q

Numeric Distribution:

A

Numeric Distribution: a percentage measure of stores that stock a
given SKU or brand compared to the universe of stores in the relevant
market.
= (# stores that stock a brand or SKU) / (total stores in relevant market)

Numeric distribution = (stores carrying Madre’s) / (total # of stores)

35
Q

All Commodity Volume (ACV)

A

All Commodity Volume (ACV): a percentage measure of the total
dollar volume of retail sales of stores stocking an SKU or brand versus
total dollar volume sales in all categories.
ACV (%) = (total sales of stores carrying a brand) / (total sales all stores)

% ACV = (total sales of stores carrying Madre’s) / (total sales all stores)

36
Q

Product Category Volume (PCV)

A

Product Category Volume (PCV) represents the share of category
sales by the stores that stock your brand. Note that the term, Product
Category Volume, is not an industry standard.
PCV (%) = (category sales of stores carrying a brand) / (total category
sales for all stores)

% PCV = (tortilla sales of stores carrying Madre’s) / (tortilla sales all stores)

37
Q

PCV Net of Out-of-Stocks

A

PCV Net of Out-of-Stocks:

the sum of the % PCV of each chain multiplied by (1-% OOS)

38
Q

Total Sales (in $ or Units)

A

Total Sales (in $ or Units) = Baseline Sales + Incremental Sales
- where -
Baseline Sales = Expected sales results in the absence of any
marketing program or promotion
- and -
Incremental Sales = Sales “lift” attributable to marketing activities

39
Q

Baseline Sales

A

Baseline Sales: Expected sales results in the absence of any

marketing program or promotion.

40
Q

Incremental Sales

A

Incremental Sales: Sales “lift” attributable to marketing activities
Incremental Sales: Total Sales – Baseline Sales
OR
Incremental Sales from Advertising
+ Incremental Sales from Trade Promotion
+ Incremental Sales from Consumer Promotion
+ Incremental Sales from Other Marketing Activities

41
Q

Lift (%)

A

Lift (%): a key metric in measuring the incremental sales generated
from a marketing program, as a percentage of baseline sales
Lift (%) = Incremental Sales ($,#) / Baseline Sales ($,#)

42
Q

Cost of Incremental Sales ($)

A

Cost of Incremental Sales ($): Cost associated with an additional
unit of sales
Cost of Incremental Sales ($) = Marketing Spend ($) /
Incremental Sales ($,#)

43
Q

Return on Marketing Investment (ROMI)

A

Return on Marketing Investment (ROMI) = a measure of the rate at
which spending on marketing contributes to profits

Return on Marketing Investment (ROMI) =
(Incremental Sales * Contribution Margin – Marketing Spending) /
Marketing Spending

44
Q

Overall coupons

A

Coupon Redemption Rate: the percentage of distributed coupons or
rebates that are redeemed by consumers

Coupon Redemption Rate (%) = Coupons Redeemed (#) / 
Coupons Distributed (#)
Cost per Redemption ($) = Coupon Face Amount ($) +
Redemption Charges ($)
45
Q

Coupon Redemption Rate

A

Coupon Redemption Rate is a key metric in assessing the
effectiveness of a coupon distribution strategy, helping to determine if
the coupons are reaching those customers most likely to use them.

46
Q

Cost per Redemption

A

Cost per Redemption helps measure the variable cost associated with
each coupon redeemed. Generally, coupon distribution costs are
considered to be fixed costs.

47
Q

Pass-Through Percentage

A

Pass-Through Percentage is the portion of
the promotional value provided by a
manufacturer to a retailer or distributor that
ultimately reaches the end consumer.

Definition

Pass-Through Percentage (%) =
Value of Promotional Discounts Provided to Consumers by the Trade ($) /
Value of Promotional Discounts Provided to Trade by Manufacturer ($)

48
Q

Percentage Sales on Deal

A

Percentage Sales on Deal tracks the percentage of sales that are
sold under a temporary discount of any kind.

Percentage Sales on Deal (%) = Sales with temporary discount / total sales.

49
Q

Target Volume in Units

A

Target Volume in Units =
(Fixed Costs + Profit Objective) / (SP – VC)

Target Volume (units) = (FC + Profit Objective) / (SP - VC)

Target Volume (units) = (FC + Profit) / (SP - VC)

50
Q

Target Volume in Dollars

A

Target Volume in Dollars =
(Fixed Costs + Profit Objective) / ((SP-VC) / SP)

Target Volume (Revs) = (FC + Profit Objective) / ((SP - VC) / SP)

Target Volume (Revs) = (FC + Profit) / ((SP - VC) / SP)

51
Q

Target Revenues

A

Target Revenues = Unit Target Volume * Selling Price

UST Notes (1 decks)

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