Marketing Metrics and Pricing Strategies
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Questions and Answers

How is the unit margin percentage calculated?

  • (Selling price per unit + Cost per unit) X 100 / Selling price per unit
  • (Selling price per unit – Cost per unit) X 100 / Selling price per unit (correct)
  • (Cost per unit – Selling price per unit) X 100 / Selling price per unit
  • (Selling price per unit – Cost per unit) X 100 / Cost per unit

What does price elasticity of demand measure?

  • The fixed costs associated with production
  • The total costs involved in marketing
  • The total revenue generated from sales
  • The responsiveness of demand to changes in prices (correct)

Which formula correctly calculates breakeven volume?

  • Total costs / Contribution margin per unit
  • Total fixed costs / Contribution margin per unit (correct)
  • Total revenue / Total costs
  • Total fixed costs / Selling price per unit

Typically, how is the elasticity coefficient represented?

<p>Usually negative (B)</p> Signup and view all the answers

Which of the following is NOT a method to assess breakeven?

<p>Sales growth rate (A)</p> Signup and view all the answers

What is a key performance indicator (KPI)?

<p>A critical metric to measure business performance (A)</p> Signup and view all the answers

In price elasticity, what does a positive elasticity coefficient suggest?

<p>Demand increases with a price increase (B)</p> Signup and view all the answers

How is markup percentage calculated?

<p>(Selling price per unit – Cost per unit) X 100 / Cost per unit (D)</p> Signup and view all the answers

What does Customer Lifetime Value (CLV) primarily measure?

<p>The expected profit from a single customer over the relationship duration (B)</p> Signup and view all the answers

Which formula correctly calculates Customer Lifetime Value (CLV)?

<p>CLV = Net present value of all future earnings – Customer acquisition cost (C)</p> Signup and view all the answers

What factors are included in the calculation of CLV?

<p>Customer revenues, customer costs, retention rate, discount rate, acquisition rate (D)</p> Signup and view all the answers

Why is estimating Customer Lifetime Value (CLV) important?

<p>It helps determine the feasibility of marketing and pricing strategies (D)</p> Signup and view all the answers

Which of the following metrics is a measure of customer sentiment?

<p>Attitudes towards brand (B)</p> Signup and view all the answers

What is a requirement for measuring brand loyalty metrics?

<p>Using a reliable scale with multiple questions (A)</p> Signup and view all the answers

Which statement about breakeven market share is true?

<p>It requires knowing the breakeven volume and the size of the market (D)</p> Signup and view all the answers

How can customer perception metrics like brand image be assessed?

<p>Using consistent scales to measure attitudes and preferences (B)</p> Signup and view all the answers

Flashcards

Unit Margin

The difference between selling price and cost per unit, expressed as a percentage.

Markup

The difference between selling price and cost per unit, expressed as a percentage of cost.

Price Elasticity

How responsive demand is to change in price.

Breakeven Point

The level of sales where total revenue equals total costs.

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Breakeven Volume

The number of units that must be sold to break even.

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Breakeven Revenue

The total revenue needed to break even.

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Breakeven Market Share

The portion of the market needed to break even.

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Contribution Margin per Unit

Selling price per unit minus variable cost per unit.

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Breakeven market share (in units)

The portion of the market (in units) a company needs to sell to cover all costs and make zero profit.

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Breakeven market share (in dollars)

The portion of the market (in revenue) a company needs to sell to cover all costs and make zero profit.

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Customer Lifetime Value (CLV)

The total profit a company expects to make from a customer throughout their relationship.

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CLV Formula Components

CLV Calculation uses Net Present Value of Future Earnings minus Customer Acquisition Cost and factors in Customer Revenues, Customer Costs, Retention Rate, Discount Rate, and Acquisition Cost.

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Customer Sentiment Measurement

Assessing customer opinions and preferences about a brand, product, or service.

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Brand Loyalty Measurement

Measuring customer loyalty by collecting data based on statements about future purchase intentions and price willingness.

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Marketing Metrics

Quantifiable measurements used to track the effectiveness of marketing strategies.

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Brand Image

The perception customers have of a brand.

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Study Notes

Unit Margin and Price Elasticity

  • Marketing metrics are used to measure business performance from a marketing perspective.
  • Key Performance Indicators (KPIs) are the most widely used metrics.
  • Unit margin and markup quantify the difference between selling price and cost.
    • Unit margin (percentage) = [(Selling price per unit - Cost per unit) / Selling price per unit] * 100
    • Markup (percentage) = [(Selling price per unit - Cost per unit) / Cost per unit] * 100
  • Price elasticity of demand measures the responsiveness of demand to price changes.
    • Elasticity = [((Final demand - Initial demand) / Initial demand)] / [((Final price - Initial price) / Initial price)]
    • Elasticity is typically negative, as price increases usually decrease demand. It depends on the ease of finding substitutes.

Breakeven Analysis

  • Breakeven point is the sales level where total revenue equals total cost.
  • Breakeven analysis is used to assess business strategy in several ways including:
    • Breakeven volume
    • Breakeven revenue
    • Breakeven market share

Customer Lifetime Value (CLV)

  • CLV measures a firm's expected profit from a single customer throughout their relationship.
  • CLV = Net present value of future earnings – customer acquisition cost
    • CLV formula uses customer revenues, customer costs, retention rate, discount rate, and acquisition cost, over a specific period.

Measuring Customer Sentiment

  • Many marketing metrics focus on non-financial factors such as perception.
  • Examples include brand attitudes, brand image, and brand preference.
  • Accurate measurement scales are crucial to assess differences in sentiment.
  • Brand loyalty can be measured through questions like:
    • Willingness to buy the brand again
    • Intent to keep purchasing the brand
    • Commitment to the brand
    • Willingness to pay a higher price for the brand

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Marketing Metrics PDF

Description

Explore key concepts in marketing metrics, focusing on unit margin, markup, and price elasticity of demand. This quiz will help you understand how these metrics influence business performance and decision-making processes. Test your knowledge of breakeven analysis and its applications in business strategy.

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