Marketing Cost Analysis
Marketing cost analysis
Business firms use several tools and techniques for marketing control. The important ones among them are listed above. 1. Marketing audit 2. Market share analysis 3. Marketing cost analysis 4. Credit control 5. Budgetary control 6. Ratio analysis 7. Contribution margin analysis 8. Marketing Information inputs and warning signals 9. MBO management by objectives
Marketing cost analysis is another important tool of marketing control. In recent years, business firms all over the world have experienced steep escalations in their marketing and distribution costs. They have found, to their dismay, that increased sales do not necessarily bring them increased profits. Containing marketing and distribution costs has become an imperative for optimizing profits. It has also become an imperative for survival against the growing competition.
Definition –
Assigning or allocating costs to a specified marketing activity or entity in a manner that accurately captures the financial contribution of activities or entities to the organization.Marketing cost analysis, or distribution cost analysis, is the analysis of costs that affect sales volume, with the purpose of determining the profitability of different segment operations.
Profitability is determined by sales volume and its associated costs and expenses.
The questions Marketing Cost Analysis answers – * Which customers/accounts are unprofitable because of order size or geographic location? * What is the minimum order size that can be filled profitably? * Which distribution channel will be the most profitable for the firm to use? * Which territories are potentially most profitable? * What profit contribution does each salesperson make? * Can cost improvements be made in physical distribution facilities? * Which product lines are unprofitable or could be improved in their profitability?
Importance of Marketing Cost Analysis:
The first
Business firms use several tools and techniques for marketing control. The important ones among them are listed above. 1. Marketing audit 2. Market share analysis 3. Marketing cost analysis 4. Credit control 5. Budgetary control 6. Ratio analysis 7. Contribution margin analysis 8. Marketing Information inputs and warning signals 9. MBO management by objectives
Marketing cost analysis is another important tool of marketing control. In recent years, business firms all over the world have experienced steep escalations in their marketing and distribution costs. They have found, to their dismay, that increased sales do not necessarily bring them increased profits. Containing marketing and distribution costs has become an imperative for optimizing profits. It has also become an imperative for survival against the growing competition.
Definition –
Assigning or allocating costs to a specified marketing activity or entity in a manner that accurately captures the financial contribution of activities or entities to the organization.Marketing cost analysis, or distribution cost analysis, is the analysis of costs that affect sales volume, with the purpose of determining the profitability of different segment operations.
Profitability is determined by sales volume and its associated costs and expenses.
The questions Marketing Cost Analysis answers – * Which customers/accounts are unprofitable because of order size or geographic location? * What is the minimum order size that can be filled profitably? * Which distribution channel will be the most profitable for the firm to use? * Which territories are potentially most profitable? * What profit contribution does each salesperson make? * Can cost improvements be made in physical distribution facilities? * Which product lines are unprofitable or could be improved in their profitability?
Importance of Marketing Cost Analysis:
The first