Measuring Marketing Performance Flashcards
1
Q
Instrumental Variables
A
Instrumental variables (IVs) are external factors that are correlated with marketing spending but are not directly affected by it. IVs can be used to isolate the causal effect of marketing spending on sales or other outcomes.
=> Filter price variation
2
Q
Price Experiments
A
Respects the ceteris paribus rule: When we see price vary, this movement is not correlated with
other demand factors. Hence, estimation of the price coefficient is not invalidated by other variables correlated with prices.
3
Q
Margin
A
(P-C)/P
4
Q
Price
A
C / (1-Margin)
5
Q
Breakeven Quantity
A
FC/(P-VC)
6
Q
Contribution Margin
A
P - VC
It is the amount of money that each unit sold contributes to covering the fixed costs.
7
Q
Profit
A
(P-VC)Q - FC
