Marketing Math

Question 1

Break even quantity equation

Answer 1

Breakeven quantity = (Fixed Costs/ Contribution Margin)

Question 2

Contribution margin equation

Answer 2

Contribution margin = Price – Variable Costs

Question 3

Types of Breakeven Analysis for Feasibility Assessment

Answer 3

Fixed marketing expenditure
o Ex: Super Bowl Campaign

Short-term variable marketing expenditures
o Coupons or promotions
o How many extra units must be sold to cover the cost

Price change
o How many extra sales or less sales for price increase or decrease

New product cannibalizes exiting products
o What is the max % of new product sales that come from existing customer for the old product

Question 4

Break Even Cannibalisation (%)
New products sales from previous

Answer 4

Break Even Cannibalisation (%) = CM of new product/ CM of old