quntative analysis Flashcards
market share
the percentage of the total market that your brand controls. sales or units
your brand sales in dollars/ total sales for all brands in dollars
step down analysis
when we estimate our market share
costs
money you are spending
revenue
money that is coming in
profit
revenue minus costs
profit margins
profit expressed as a percentage of revenue
cost per unit=
fixed costs plus variable costs
what are fixed costs
costs that do not vary with how many units you make (lease for factory, product r an d, ceo salary, tv ads)
variable costs
costs that do vary with the level of production
ex: raw materials , cost of packaging, salary of salespeople)
contribution margin
how much money from the sale is left after accounting for the variable costs. this money can be used to cover paying off fixed costs we investedd in
contrbtuon per unit=
price per unit- variable costs per unit
contribution margin
price per unit- variable costs per unit/ price per unit
profit margin
the profit expressed as a percentage of the sales price
profit oer unit
price per unit- all costs per unit(fixed- variable costs)
profit margin formuyla
price per unit - all costs per unit/ price per unit
markup on cost
how much is the price increased (marked up) by the retailer, relative to what they paid to the wholesale distributor (their variable costs per unit aka cogs)
markup on cost formula
price per unit- variable costs per unit/ variable costs per unit
Markup on cost is a pricing strategy used by businesses to determine the selling price of a product based on its production cost.
what is break even
at which cost and revenues are equal. there is neither a profit nor loss
break even formula in units
total fixed cost/ price - variable cost
break even formula in dollars
total fixed cost/ contribution margin as a percent
price elasticity
measures how responsive demand is to a change in price
price elasticity formula
percentage change in demand/ percentage change in price
percentage change formula
new- old/old
what do the signs of price elasticity show
show the relationship between price change and demand change
what does the number of price eladtciyt show
describes the elatsity itself
PE<1
price inelastic
PE>1
price elastic
PE=1
unit elastic, mid point between high elasticity and low elasticity. changing the price has no impact on profit
inrease In price
decrease in demand
what is cross price elasticity
measures the effect of a price change of one product on the demand change of a second product
if two products are subsitiuyde products
a price increase in one product will lead to a price increased in demand in the other (ex: butter vs margarine, Netflix vs Disney ). cross price elasticity is positive
if two products are complementary products
a price increase in one product will result in a decrease in demand for the other (razors and blades, hockey sticks and hockey pucks ). cross price elasticity is negative
cross elasticity formula
percentage change demand of p2/ percentage change price of p1
what are price chains
are a tool for seeing how prices increase, and contribution margins are split, as products pass through these intermediaries
what’s the order for price chains
manufacter, wholesaler, retailer, consumer
break even market share
the break even dollars/ total market share
