BBBC--Lesson-8
Welcome!
Warm Up - MATH
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Table Discussion:
What are some factors that might influence the price of an item?
List 3-5 of these factors at your table.
Large-Group Share-Out
Break-Even Point
The Break Even Point is the point at which sales revenue equals the cost and expenses of making and distributing a product. After this point is reached, businesses begin to make a profit on the product.
Suppose a Toy Manufacturer plans to make 100,000 dolls that will be sold at $6.00 each to retailers and wholesalers. The cost of making and marketing the dolls is $4.50 per unit (doll). That make s a total of $450,000 for the 100,000 dolls. How many dolls must the manufacturer sell to cover it's costs and expenses?
To calculate the break-even point, you will divide the total amount of costs and expenses by the selling price:
$450,000 / $6 = 75,000
This means that 75,000 dolls is the company's break even point, and once they sell their 75001 dolls, they begin to make a profit.
NOW YOU TRY IT!
Suppose a Toy Manufacturer plans to make 200,000 toy cars that will be sold at $2.50 each to retailers and wholesalers. The cost of making and marketing the toy cars is $0.90 per unit (toy car). That makes a total cost of $180,000 for the 200,000 toy cars. How many toy cars must the manufacturer sell to cover it's costs and expenses?
Mark-Up Pricing
Markup pricing is used primarily by wholesalers and retailers who are involved in acquiring goods for resale. The markup must cover the business’s expenses.
Price = Cost + Markup (as dollars & percentage)
Example:
Toy Doll has a PRICE of $6.00. The Cost of each Doll is $4.50.
What is the Markup? (Give answer as dollars and %)
Solution
$6.00 = $4.50 + X. $6.00 - $4.50 = X X = $1.50
Now I must calculate that answer as a percentage by dividing it by the Cost.
$1.50 / $4.50 = 0.333333 = 33.33% Markup
NOW YOU TRY IT!
Toy Car has a PRICE of $2.50. The Cost of each Car is $0.90.
What is the Markup? (Give answer as dollars and %)
Price Planning
Price is one of the four Ps of the marketing mix and is an essential element in marketing a product to the correct target market. The goals of company and government regulations are two issues that must be considered in the pricing process. Understanding the steps involved in determining the price of a product is essential for business success.
Pricing Concepts
After deciding on pricing goals, marketers must establish pricing strategies that are compatible with the rest of the marketing mix. Understanding the various options helps businesses effectively execute the difficult task of pricing products.
Continue Working on Your Presentation
Look at the CEREAL CREATION PROJECT and the PRESENTATION RUBRIC and continue working on your presentation.
By the end of this lesson, you should have finished the following slides:
Title Slide *****Slides listed in RED should have been done already*****
Introduction--Product Description
Introduction--Description of Need
Introduction--Why this cereal should go to market
Competitive Analysis--General industry data
Competitive Analysis--Direct and Indirect Competition
Target Market--Overview
Target Market--Demographics
Target Market--Geographics
Target Market--Psychographics
Marketing Plan - Product - Features and Benefits
Marketing Plan - Price - Introduction Pricing Strategy--DELETE
Marketing Plan - Price - Break Even Point Calculations
Marketing Plan - Price - Markup Calculations
Marketing Plan - Price - Pie Charts w/Anticipated Market Share
Marketing Plan - Place - Distribution Channels
Marketing Plan - Place - Physical Distribution
Marketing Plan - Promotion - Slogan
Pricing Slides - CLICK HERE . (copy info & paste into your presentation)
If you are falling behind, or want more time to work on your cereal box, presentation, etc. Please come in during FLEX or 1st CONNECT.