Set: Chapter 18 - Marketing
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All 7 Terms
| | Term | Definition |
|---|---|---|
| |
Markup chain | the sequence of markups firms use at different levels in a channel – determines the price structure in the whole channel |
| |
Stockturn | the number of times the average inventory is sold in a year |
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Average costs | is obtained by dividing total cost by the related quantity |
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Experience curve pricing | when you know that increased future volume will result in lower average costs, so you price below current average cost knowing that as volume rises, average costs will fall. This is also a way of discouraging competitors from entering the market by using a low “penetration” price from the beginning even though it might be at a short-term loss. |
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Fixed cost contribution per unit | the assumed selling price per unit minus the variable cost per unit. BEP in units is equal to total fixed cost divided by fixed cost contribution per unit |
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Trade chain discounts | for test purposes, will be computed on the selling price. For example, if a retailer sells an item for $100 and has a margin of 60% and the wholesaler has a margin of 20%, at what price does the manufacturer sell to the wholesaler (e.g. what does the wholesaler pay for the item)? Answer = $32. |
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Breakeven point in units | TFC/Contribution Margin/unit (CM/unit = Selling Price – Variable cost). If TFC = $80,000, selling price = $2/unit and variable cost = $1.50, what is the BEP in Units? What is the BEP in dollars (hint – use the selling price to convert units to dollars)? |
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Set Information
| Terms | 7 |
| Creator | tim987 |
| Created | May 5, 2008 |
| Groups | None |
| Tags | principles of marketing, dr. king |
| Access | Anyone |
| Edit | Creator Only |
Most Missed Words
- Fixed cost contribution per unit → the assumed selling price per unit minus the variable cost per unit. BEP in units is equal to total fixed cost divided by fixed cost contribution per unit - 5 misses
- Trade chain discounts → for test purposes, will be computed on the selling price. For example, if a retailer sells an item for $100 and has a margin of 60% and the wholesaler has a margin of 20%, at what price does the manufacturer sell to the wholesaler (e.g. what does the wholesaler pay for the item)? Answer = $32. - 5 misses
- Average costs → is obtained by dividing total cost by the related quantity - 3 misses
- Experience curve pricing → when you know that increased future volume will result in lower average costs, so you price below current average cost knowing that as volume rises, average costs will fall. This is also a way of discouraging competitors from entering the market by using a low “penetration” price from the beginning even though it might be at a short-term loss. - 2 misses
- Markup chain → the sequence of markups firms use at different levels in a channel – determines the price structure in the whole channel - 1 miss
- Stockturn → the number of times the average inventory is sold in a year - 1 miss
- Breakeven point in units → TFC/Contribution Margin/unit (CM/unit = Selling Price – Variable cost). If TFC = $80,000, selling price = $2/unit and variable cost = $1.50, what is the BEP in Units? What is the BEP in dollars (hint – use the selling price to convert units to dollars)? - 1 miss