The dollar amount added to the cost of sales to get the selling price
Mark up
% of selling price that is added to the cost to get the selling price
Mark up percent
The sequence of markups firm use at different levels in a channel
Mark up chain
the number of times the inventory is sold in a year
stock turn rate
adding a reasonable markup to the average cost of the product
Average cost of reasonable markup
When revenue = cost
After this point, you make a profit
Break Even Analysis
the change in total revenue that results from the sale of one or more units of a product
Marginal Revenue
the change in total cost when another unit is produced
the cost of producing one more unit after the break-even point
Marginal Cost
extra profit on the last unit sold
MR-MC=___
Marginal Profit
Similar products that have priced products within a range
Full Line
Selling lots of products for lower price
Product Bundling
Marketer puts 2 things together that go with each other to sell
Complementary Product
Product has elasticity. People lower price and people react. May lose money on product, but will make money on everything else they buy
Loss Leader
Marketer who sets price to maximize profit and want a certain return on product. Other marketers follow suit
Price Leader
All of the product of the same line are priced the same
Price Lining
Perception of what you buy is your money’s worth
Psychological Pricing
High price and paid in cash/money on hand
Prestige Price
psychology in pricing (use $9.99 instead of $10)
Odd-even
Tools for control
- Sales analysis
- Performance Analysis
- Performance Index
- Iceberg Principle
- Full Cost Approach
- Contribution Margin
- Market Audit
Look at everything to launch
Full Cost Approach
Selling price - Variable Cost
Contribution Margin
Dollars organization needs for fixed assets
Capital
Short term dollar’s organization needs
Working Capital
Profit is a ____ of capital
Internal Source
Selling stocks and bonds is a _____ of capital
External Source
Go to the bank and take out a loan
Debt Financing
Document that says all expenses are taken care of
Cash Flow Statement
Ability to produce a certain quantity and quality of products or services
Production Capacity
Quantity will be there, but customized for that store
Mass Customization
What to do with excess inventory?
Try to sell, export overseas, outlet malls, etc.
Charge costs ongoing basis
Natural accounts
Looks at entire industry for dollars generated
Market Potential
Look at one company in the market and how they will do with selling
Sales Forecast
Variable that can change. What are you changing to make more $? (Examples: hire sales people, training, improve customer service, etc.)
Factor Method
Vice Presidents of functional areas get together and set dollar amount
Jury of Executive Opinions
Look at past info and move to future
Trend Extension
B2B connect with retailers and wholesales. Can order more or less of product
Sales People
Asking people for input
Survey
Look at market share. Has it increased? Decreased? What do we do to increase sales?
Market Test
Define Market Strategy (Short Answer bullets)
- Strategy has document of Market Plan
- Plan has goals and objectives
- Daily tasks, responsibilities, activities that you complete
- Need time frame
- Cost/Budget
- Takes right people to do work
- Need control tools to measure performance
- Target Market
- Customize Market Mix
When is this going to happen?
Implementation
What are the implementation tools?
- TQM
- Continuous Improvement (Kaizen Kaizen)
- Pareto Chart
- Fishbone Diagram
- Training
- Empowerment
- Benchmarking
keeps track of problems and gives ranking
looks like a graph
Pareto Chart
id’s problems and what causes them
Fishbone Diagram
find companies that are successful and use them as a role model. want to be like them
Bench Marking
generated $x and look at categories to see what sells and what doesn’t
Product Category
Breakdown by region
Geographic Regions
Who spends $ here? New? Existing? The frequency of purchases?
Customer Characteristics
Product sold in different stores. See how it performs in different types of stores
Channel of Distribution
coming from regular price or discounted?
Dollars generated
how many $ generated from a store, online, catalog, telemarketers?
Method of Sale
is $ spent with a credit card, check, or cash? Can have store credit card
Financial Arrangement
Try to sell as much as possible
order size
look at goals and compare to how you did
Performance Analysis
need to do something with variables to bring in sales
ex: # of employees, promotion, etc.
Performance Index
10% above water, 90% below. Asking for feedback, but some people won’t tell the truth
Iceberg Principle