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MKTG 376 > MKTG 376 Test 3 > Flashcards

MKTG 376 Test 3 Flashcards

1
Q

Market Share

A

one of the fundamental measures used in marketing. Measures the sales of a brand or product relative to the overall size of the market.

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2
Q

Market Share Formula

A

Revenues = Unites Sold x Price

Units Sold = Revenues/Price

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3
Q

Unit Market Share Formula

A

Unit Sales for Brand / Total Market Unit Sales

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4
Q

Revenue Market Share Formula

A

Sales Revenue for Brand / Total Market Sales Revenue

in percentages (multiply by 100)

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5
Q

Why is Market Share important?

A

is an indicator of how a brand is doing relative to the competition. Includes:

  • customer’s assessment of brand’s value proposition
  • advertising
  • distribution
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6
Q

Why might a company have a higher price relative to the competition?

A

they have a higher revenue market share than unit market share.

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7
Q

How do unit sales have an impact of unit costs?

A

higher volumes of production lead to lower production costs relative to competition

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8
Q

Market Definition

A

in terms of geography, demographic, channel, time periods, etc.

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9
Q

Why do we need to define the market?

A 
Kellogg's Example:
Are we defining 
-all brands of corn flakes
-all types of cereals 
-all breakfast foods
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10
Q

Year-on-year Percentage Growth

A

Growth % = Year 2 Sales - Year 1 Sales / Year 1 Sales

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11
Q

Relative Market Share

A

indexes a firm’s or brand’s market share against its leading competitor.

Provides managers with a measure to compare the relative market positions of their brands across markets.

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12
Q

Relative Market Share Formula

A

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

Brand Sales / Largest Competitor Sales

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13
Q

Relative Market Share Value Greater than 1

A

when the brand under consideration is the market leader

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14
Q

Relative Market Share Value Less than 1

A

when the brand under consideration is not the market leader

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15
Q

Relative Market Share Metric

A

popularized in 1960s by Boston Consulting Group (BCG), where relative market share is a surrogate for competitive strength

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16
Q

Market Growth Rate

A

market attractiveness and potential

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17
Q

BCG Matrix

A

a portfolio planning model

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18
Q

Stars

A

High Market Share & High Growth Rate

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19
Q

Cash Cows

A

High Market Share & Low Growth Rate

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20
Q

Question Marks

A

Low Market Share & High Growth Rate

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21
Q

Dogs

A

Low Market Share & Low Growth Rate

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22
Q

BCG Growth-Share Matrix

A
  • Assumes that increasing relative market share will result in cash generation
  • Assumes that growing markets requires investment in assets, therefore consumption of cash
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23
Q

Dogs Investment

A

little or no potential, divest

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24
Q

Question Marks Investment

A

rapidly growing, consume cash; but have low share, do not generate cash. Needs careful analysis

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25
Q

Stars Investment

A

generate and consume large amounts of cash; will become cash cow when growth slows

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26
Q

Cash Cows Investment

A

mature market, generate more cash than they consume; fund other units such as question marks

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27
Q

Market Concentration

A

the degree to which a relatively small number of firms accounts for a large proportion of the market

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28
Q

3 Firm Concentration Ratio

A

sum of the market shares of the leading 3 competitors in a market

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29
Q

4 Firm Concentration Ratio

A

sum of the market shares of the leading 4 competitors in a market

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30
Q

Herfindahl Index

A

a market concentration metric derived by adding the squares of the individual market shares of all players in the market

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31
Q

What is used to decide if a merger is good for competition in a market place?

A

the Justice Department uses the Herfindahl-Hirschman Index to decide whether it is good

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32
Q

HHI under 1,000

A

considered a competitive market

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33
Q

HHI between 1,000-1,800

A

The Justice Department is likely to scrutinize a merger

34
Q

HHI over 1,800

A

the Justice Department is almost certain to reject the approval of the merger

35
Q

Market Penetration (Category)

A

the number of people who buy a specific brand or a category of goods at least ONCE in a given period, divided by the size of the relevant market population

36
Q

Market Penetration (formula)

A

customers who purchased a product in the category/total population

37
Q

Brand Penetration (formula)

A

Customers who purchased the brand/Total Population

38
Q

Should a manager seek sales growth by acquiring new customers or seek growth by ‘stealing’ customers from competitors?

A

Growing the market by getting new customers (who have never used) is easier than stealing from competitors.

39
Q

What happens if market penetration is high?

A

it is harder to grow the market

40
Q

Market Share (formula)

A

brand sales/total sales

41
Q

Category Development Index (CDI)

A

Category sales ($ or units) in a specified segment compared to sales of the category in the entire market, usually on a per-capita basis.

42
Q

Category Development Index (CDI) (formula)

A

(Category unit sales in segment/Population in segment) / (Total category unit sales)/(Total population)

43
Q

Brand Development Index (BDI)

A

Brand sales ($ or units) in a specified segment compared to sales of brand in entire market, usually on a per-capita basis

44
Q

Brand Development Index (BDI) (formula)

A

(brand sales in segment)/(population in segment)/(total brand sales)/(total population)

45
Q

Purpose of BDI and CDI

A

help identify strong and weak segments (such as demographic or geographic) for a brand or category

46
Q

Revenue is often called…

A

“top line”

47
Q

Income or Profit is often called…

A

“bottom line”

48
Q

Basic Income Statement

A

Revenue-Costs = Income

49
Q

How to increase revenue?

A

Increase prices

Increase sales of units

50
Q

Distribution Channel

A

a set of interdependent organizations involved in the process of making a product or service available for use of consumption by the consumer or business user.

51
Q

What is the $ Margin?

A

Margin=profit

Desired $ margin + cost to produce = Selling Price

52
Q

What is the % Margin

A

Desired $ Margin % + Cost to Produce % = Selling Price %

53
Q

Manufacturer % Profit Margin

A

Selling Price - Cost = Profit Margin / Selling Price = profit

54
Q

Desired Margin

A

usually manufacturers, resellers, etc. know their costs and need to figure out what they want/need

55
Q

Selling Price =

A

Cost/(1-% Margin)

56
Q

Manufacturer’s cost to produce is $50. Manufacturer wants 60% margin. What is selling price?

A

$50/(1-.6)=$125

57
Q

Manufacturer’s cost to produce is $50. Manufacturer wants 60% margin. Retailer bought it for $125. Retailer wants 20% margin. What is selling price?

A

$125/(1-.2)=$156.25

58
Q

The selling price from manufacturer is $160. the margin is 33%. What is the manufacturer’s cost?

A

=Manufacturer SP * (1-margin%)

$160*.67=$107.25

59
Q 
Retailer sells the wine to consumers for $18 a bottle. Channel margins % are as follows. What is the cost to the manufacturer?
Retailer-33%
Distributor-25%
Importer-33%
Manufacturer-50%
A

$18(1-.67)=12.06
$12.06(1-.25)=$9.05
$9.05(1-.33)=$6.07
$6.07(1-.50)=$3.00

60
Q

$ Unit Margin

A

Selling Price - Cost

61
Q

% unit margin

A

Selling Price - Cost / Selling Price

62
Q

Selling Price

A

Cost / (1- %margin)

63
Q

% Margin for multiple channels

A

Average Margin % = margin1+margin2+margin3 / total of units

64
Q

Total Sales =

A

total costs/total revenue

65
Q

Total Margin $ =

A

Total Revenue - Total Costs

66
Q

Total Margin % =

A

Total Margin $ / Total Revenue

67
Q

Mark-Up =

A

Cost * (1+margin%) (decimal)

68
Q

A retailer buys t-shirts for $10 and sells them at 50% mark-up

A

Selling price = $10*1.50=$15

69
Q

Total Costs

A

Total variable costs + Total fixed costs

70
Q

Profits

A

Total revenues - Total Costs

71
Q

Total contribution

A

Total revenues - Total variable costs

72
Q

$ Unit Contribution margin

A

Selling price per unit - variable costs per unit

73
Q

% Unit Contribution margin

A

$ contribution margin/selling pricer per unit

74
Q

Total variable costs

A

Unit variable costs * Units Sold

75
Q

Break Even Point

A

Total Costs = Total Revenue

76
Q

Unit Break-even =

A

Fixed Costs / Unit contribution

77
Q

BE (units) =

A

Fixed Costs/(SP-VC)

78
Q

BE ($) =

A

FC / ((SP-VC)/(SP))

79
Q

Target Volume in Units =

A

(Fixed Costs + Profit Objective) / (SP-VC)

80
Q

Dollar Break-even =

A

(Fixed Costs + Profit Objective / ((SP-VC)/SP))

MKTG 376 (2 decks)

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