3. Margins and Profits


Key concepts covered in this chapter:


Selling Prices and Channel Margins

Average Price per Unit and Price per Statistical Unit

Variable Costs and Fixed Costs

Marketing Spending—Total, Fixed, and Variable

Break-Even Analysis and Contribution Analysis

Target Volume

Peter Drucker has written that the purpose of a business is to create a customer. As marketers, we agree. But we also recognize that a business can’t survive unless it makes a margin as well as a customer. At one level, margins are simply the difference between a product’s price and its cost. This calculation becomes more complicated, however, when multiple variations of a product are sold at multiple prices, through multiple channels, incurring ...

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