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marketing 300

marketing 300. discussion section. pass back papers. agenda. Evaluations Marketing Math Skimming and Penetration Pricing Pass back homework and projects. evaluations. Do them! Any and all feedback is appreciated. Lecture and discussion section are separate. marketing math.

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marketing 300

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  1. marketing 300 discussion section

  2. pass back papers

  3. agenda • Evaluations • Marketing Math • Skimming and Penetration Pricing • Pass back homework and projects

  4. evaluations • Do them! • Any and all feedback is appreciated. • Lecture and discussion section are separate

  5. marketing math • Please, please, please practice these problems before coming to the exam!

  6. workforce calculation • Assume that Cantco salespeople spend 4 hours per day on sales calls and the average call is two hours. A sales person works 50 weeks per year, 5 days per week. Assume 500 “A” accts. that require 40 calls/year, and 3000 “B” accts that need 10 calls per year. How many people do you need?

  7. workforce calculation • Assume that salespeople spend 4 hours per day on sales calls and the average call is two hours. A sales person works 50 weeks per year, 5 days per week. Assume 500 “A” accts. that require 40 calls/year each, and 3000 “B” accts that need 10 calls/year each. How many people do you need? (500 * 40) + (3000 * 10) = 50,000 (4 hours/2 hours) * 5 * 50 = 500 100 Calls that need to be made in a year = # of accounts * calls needed for those accounts • # of calls a salesperson can make per year = calls per day * days per week * weeks per year • total calls needed / # each person can make = # people you need

  8. Average Unit Cost of A Total Cost / Total Units = Average Unit Cost

  9. Average Unit Cost of A Total Cost / Total Units = Average Unit Cost

  10. price setting Now you know cost; what do you need to set price? • Demand or an assumption about demand • Estimates about the quantity to be produced • Target return expected

  11. problems with ACP Why is setting price based on average-cost pricing potentially problematic? • Misjudging production capabilities means cost goes up • Misjudging demand means pricing won’t justify costs • Costs change based on quantity (economies of scale)

  12. break-even point What is a break-even point? • the sales quantity at which total costs will equal total revenue • no money lost or gained

  13. break-even point To calculate break-even point, use this formula: BEP = Fixed costs / Unit Fixed Cost Contribution or BEP = Fixed costs / (Price – Cost)

  14. break-even point Real Phlorida Orange Juice’s fixed costs for the year are estimated at $200,000. Its premium orange juice food product sells for $250. The variable cost per unit is $200. Sales for the coming year are expected to reach $1,250,000. What is the break-even point? BP = Fixed Costs / (Price – Cost)

  15. break-even point Real Phlorida Orange Juice’s fixed costs for the year are estimated at $200,000. Its product sells for $250. The variable cost per unit is $200. Sales for the coming year are expected to reach $1,250,000. What is the break-even point? BP = Fixed Costs / (Price – Cost) $200,000 ($250 – $200) 4,000 units fixed costs price - cost breakeven quantity

  16. expected profit Real Phlorida Orange Juice’s fixed costs for the year are estimated at $200,000. Its product sells for $250. The variable cost per unit is $200. Sales for the coming year are expected to reach $1,250,000. What is the expected profit? • Expected profit = Total Sales – Total Costs

  17. expected profit (con’t) Real Phlorida Orange Juice’s fixed costs for the year are estimated at $200,000. Its product sells for $250. The variable cost per unit is $200. Sales for the coming year are expected to reach $1,250,000. Expected profit? Profit = Total Sales – Total Costs Total sales = $1,250,000 Total costs = fixed costs + (unit cost)*(units sold) Total costs = $200,000 + ($200)*($1,250,000/250) Total costs = $200,000+ ($200)*(5000) Total costs = $1,200,000 Profit = $50,000 total sales - total costs = profit

  18. expected profit #2 Real Phlorida Orange Juice’s fixed costs for the year are estimated at $200,000. Price is $250, unit variable cost is $200. If sales are forecast at $875,000, what is profit?

  19. should they produce? Real Phlorida Orange Juice’s fixed costs for the year are estimated at $200,000. If sales are forecast at only $875,000 what is their profit? Total sales = $875,000 total sales - Total costs = fixed costs + (unit cost)*(# units) = $200,000 + ($200)*($875,000/$250) = $200,000 + ($700,000) = $900,000 total costs = Profit = - $25,000 profit Loss of $25,000 for the year. Should they shut down operations for the year?

  20. decisions, decisions… Option B -$200,000 Option A -$25,000

  21. should they produce? • If the company sells only 3,500 units, they will lose $25,000. • If the company doesn’t produce (sells 0 units), they will lose $200,000 of fixed expenses! • Better to lose less than to lose more!

  22. mark-ups • What is a mark-up? • A mark-up is the difference between selling price and cost • The mark-up percentage in this class is based on sales price. • NOTE: This may differ from what you were taught in accounting!

  23. mark-up percentage • To calculate markup, use this formula: ( Price – Cost ) / Price = Mark-up percentage • Use simple algebra to fill in what you have and solve for what you need.

  24. what’s that formula?

  25. mark-up percentage • You’re a realtor selling a 10,000 sq. ft. igloo in an exclusive gated community • Cost  $500,000 • Price  $750,000 • What is the mark-up percentage? • Take a moment to calculate.

  26. mark-up percentage Cost = $500,000, Price = $750,000 Price – Cost / Price = Mark-up $750,000 - $500,000 = $250,000 $750,000 .33333  33.33% price - cost price mark-up

  27. pricing from mark-up • Your company buys dogsleds from Wolf Movers, Inc. for $300. • You want to sell them at a 40% mark-up. • How do you price the dogsleds? • Take a moment to calculate. • (Price – Cost) / Price = Mark-up

  28. mark-up percentage • Mark-up = (Price – Cost) / Price • .4 = (x – 300) / x • .4x = x – 300 • .6x = 300 • x = $500

  29. 2/10 Net 30 • 2% discount if you pay in 10 days • If you pay after 10 days, you pay full price • $100 item: • on day 1-10, you pay (.02 * $100) = $98 • on days 11-30, you pay $100

  30. The Exam • 100 Questions, 2 hours • May 14, 5:05 – 7:05pm • For your location, see Learn@UW • What’s on the exam • Most of exam is not cumulative • Questions on targeting, segmenting, positions, life cycles are fair game – know this stuff!

  31. exam review A company trying to sell toothpaste will probably focus on which promotion objective? A. Persuading B. Pioneering C. Informing D. Publicizing E. Lagging

  32. exam review If a company is trying to get stores to sell something by bribing their manager with stocking fees, they are using a(n) A. Direct response promotion B. Push strategy C. Pull strategy D. Integrated marketing communication method E. Illegal promotion technique

  33. exam review A guy who is hired by a producer to find out what retailers are doing, and to help them sell product is called a A. Missionary sales reps E. Manufacturers' agents B. "a Joe Salesman" representative C. Order takers D. Order getters

  34. exam review TrashCo just invented a revolutionary new device that automatically collects and burns the leaves in your yard. TrashCo wants to put out an ad explaining to potential customers what the product is and why they might want it. The campaign should focus on: A. Competitive advertising B. Pioneering advertising C. Institutional advertising D. Reminder advertising E. None of the above

  35. exam review If producer CrudCo does "cooperative advertising" with their retailer FailCo, this means that: • They design the ads together B. They both pay for national ads C. They both pay for local ads D. They agree not to smear each others' name in their ads E. FailCo does some advertising and CrudCo handles the rest of the promotion blend

  36. exam review A company has just developed a great new disposable cigarette lighter that tells hilarious jokes. They want to temporarily cut prices to get this on the market really fast and into peoples' hands ASAP. They should use: A. A penetration pricing policy B. A one-price policy C. A skimming pricing policy D. A flexible-price policy E. Introductory price dealing

  37. exam review If a powerful bicycle store wants to sell bikes at $100 (instead of the usual $500) so that they can put the competing bike store out of business, they may be prohibited by the: A. Magnuson-Moss Act B. Robinson-Patman Act C. Wheeler-Lea Act D. FTC Act E. Sherman Act

  38. exam review Which of the following is an example of odd-even pricing? A. $8.73 B. $3.90 C. $95.98 D. $99.95 E. $100.00

  39. exam review A producer in Podunk uses "zone pricing." The company is selling malt syrup for $1200/lb in the Western Zone--which includes Bumblefusk and Suck City. The freight cost from its plant to Bumblefusk is $150/lb. and from its plant to Suck City is $200/lb. In this situation: A. One lb. of syrup will costs a Bumblefusk buyer the same amount as a Suck City buyer B. People in either city would pay $1200 for one lb of syrup C. One lb of syrup delivered to Bumblefusk would cost the buyer $1350 D. One lb of syrup delivered to Suck City would cost the buyer $1400 E. Both C and D

  40. exam review A producer in Podunk uses "zone pricing." The company is selling malt syrup for $1200/lb in the Western Zone--which includes Bumblefusk and Suck City. The freight cost from its plant to Bumblefusk is $150/lb. and from its plant to Suck City is $200/lb. In this situation: A. One lb. of syrup will costs a Bumblefusk buyer the same amount as a Suck City buyer B. People in either city would pay $1200 for one lb of syrup C. One lb of syrup delivered to Bumblefusk would cost the buyer $1350 D. One lb of syrup delivered to Suck City would cost the buyer $1400 E. Both C and D

  41. exam review A tractor has a production cost of $48. The manufacturer takes a 20 percent markup, the wholesaler takes a 25 percent markup, and the retailer takes a 80 percent markup. Therefore, the item has a retail selling price of $400.   TRUE   or FALSE?

  42. exam review Companies should ideally advertise on TV if they can afford it. TRUE   or FALSE?

  43. preparation • PRACTICE WITH QUIZ QUESTIONS ON THE BOOK WEBSITE! • www.mhhe.com/fourps • There’s a bunch of stuff at the end of these slides • A BIG PRACTICE EXAM IS ON MY WEBSITE!

  44. Considering Marketing? • There’s much more to it than what we learned in Marketing 300: • channels, consumer behavior, modeling, market research… • Marketing is one of the most multi-disciplinary fields in industry (and academia) • Combines: psychology, sociology, economics, statistics, political science, history, design… • Allows creativity, analytical thought, experiments, insights into society… • Far-reaching and sometimes unexpected applications in a lot of different areas

  45. Some parting words… • Business is the biggest engine of change in the world. • Every time you buy/create something as an individual or a company, you are making a statement: • About yourself • About your society • About the direction you want the world to take • As managers, the decisions you make could have wide-reaching effects. • You do have the power to make a difference.

  46. Some parting words… • It’s been an absolute pleasure being your TA • If you ever need anything from me, or if I can help you in any way, don’t hesitate to contact me (rkamath@wisc.edu) • Facebook me! • GOOD LUCK ON THE EXAM!

  47. Projects

  48. Ch 13: Integrated Mkt Communications • Integrated marketing communications – the intentional coordination of every communication from a firm to a target customer to convey a consistent and complete message. • Promotion-communicating information between the seller and potential buyer to influence attitudes and behavior • Personal selling (sales managers)–direct spoken communication between sellers and potential customers • Mass selling (ad managers) –communicating with large numbers of potential customers at the same time • Advertising-any paid form of non-personal presentation of ideas, goods, or services • Publicity (PR managers) – unpaid form of nonpersonal presentation of ideas, goods, or services • Sales promotion (sales promotion managers)– promotional activities other than advertising, publicity, and personal selling that stimulate interest, trial, or purchase by final customers or others in the channel • Traditional Communication Process: Source Encoding  Message Channel  Decoding  Receiver *noise* throughout! • Consumer Initiated Communication Process Consumer Search Message Channel  Select Topic Source’s Message Consumer *noise* throughout! • Direct response promotion – designed to prompt immediate feedback by specific target customers. • Usually relies on a CRM database; More than junk mail: can be TV, telephone, print, email, etc. • Pushing– using promotional effort to convince customer to purchase • Pulling – customers ask for product • Adoption process guides promotion planning • Promotion depends on life cycle stage

  49. Chapter 13

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