MKTG647 Homework

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Marketing Costs
1. Identify 10 specific marketing activities that incur costs. Five of these marketing activities should be fixed costs, and five should be variable costs. Explain the difference between fixed and variable costs in marketing.

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2. When setting a price, which is more important: unit cost or variable cost? Explain.

3. Are marketing costs programmed or committed costs?

4. What is the sunk cost fallacy, and what type of cost does it refer to?

Contribution Analysis

Product ……… Contribution Margin

A …………….. 0.2

B ……………….. 0.5

C …………………… 0.75

1. Explain what the differences in contribution margin mean for each product. If you were to spend $100,000 in marketing costs for each product, what are the ramifications to break-even analysis?

2. Based on the above information alone, which of the three products is more likely to compete based on price? Which product is more likely to compete based on non-price factors? Explain your rationale.

3. Why is contribution analysis a useful tool to master in strategic marketing?

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