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?

Usually negative Signup and view all the answers

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

Sales growth rate Signup and view all the answers

What is a key performance indicator (KPI)?

A critical metric to measure business performance Signup and view all the answers

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

Demand increases with a price increase Signup and view all the answers

How is markup percentage calculated?

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

What does Customer Lifetime Value (CLV) primarily measure?

The expected profit from a single customer over the relationship duration Signup and view all the answers

Which formula correctly calculates Customer Lifetime Value (CLV)?

CLV = Net present value of all future earnings – Customer acquisition cost Signup and view all the answers

What factors are included in the calculation of CLV?

Customer revenues, customer costs, retention rate, discount rate, acquisition rate Signup and view all the answers

Why is estimating Customer Lifetime Value (CLV) important?

It helps determine the feasibility of marketing and pricing strategies Signup and view all the answers

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

Attitudes towards brand Signup and view all the answers

What is a requirement for measuring brand loyalty metrics?

Using a reliable scale with multiple questions Signup and view all the answers

Which statement about breakeven market share is true?

It requires knowing the breakeven volume and the size of the market Signup and view all the answers

How can customer perception metrics like brand image be assessed?

Using consistent scales to measure attitudes and preferences Signup and view all the answers

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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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.