Brief note on Nice Marketing with an example A niche market is the subset of the market on which a specific product

is focusing. The market niche defines the product features aimed at satisfying specific market needs, as well as the price range, production quality and the demographics that is intended to impact. It is also a small market segment. For example, sports channels like STAR Sports, ESPN, STAR Cricket, and Fox Sports target a niche of sports lovers. Every product can be defined by its market niche. The niche market is highly specialized, aiming to survive among the competition from numerous super companies. Even established companies create products for different niches, for example, Hewlett-Packard has all-in-one machines for printing, scanning and faxing targeted for the home office niche while at the same time having separate machines with one of these functions for big businesses Brief note on Programmed costs and committed costs. Programmed costs Result from attempts to generate sales volume Examples include: Advertising, sales promotion, and sales salaries Committed Costs Costs required maintaining the organization Examples include non-marketing expenditures, such as: rent, administrative cost, and clerical salaries Brief note on Relevant and Sunk Costs. Relevant In general, opportunity costs are considered relevant costs Relevant cost is an accounting term often used in the business world when involving the purchasing choices done by management. Relevant costs are expenses that need to be taken into consideration when purchasing or planning to purchase certain items. 2. Differential or quantifiable future cost that must be considered in making a particular decision..

Sunk Costs. A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business may face, such as inventory costs or R&D expenses, because it has already happened. Sunk costs are independent of any event that may occur in the future. The direct opposite of relevant costs. Examples of sunk costs: Past marketing research and development expenditures Last year’s advertising expense

Firms with high total fixed costs relative to total variable costs are defined as having high operating leverage. Definition of 'Compounded Annual Growth Rate . Based on the premise that a dollar received tomorrow is worth less than a dollar today Useful in determining a business’s net cash flows The discount rate can be expressed as follows: Discount factor = ___1___ (1 + r)n Where the r in the denominator is the interest rate and n is the number of years. the present value of the $1 million would be: 1 PV = ———— X $1.CAGR' The year-over-year growth rate of an investment over a specified period of time. Discounted cash flows are future cash flows expressed in terms of their present value Incorporates the time value of money 3.000 = $620. where n is the number of years in the period being considered. Microsoft's costs remain basically unchanged. So. The bulk of this company's cost structure is fixed and limited to upfront development and marketing costs. Example. . once the company has sold enough copies to cover its fixed costs. The compound annual growth rate is calculated by taking the nth root of the total percentage growth rate. If the discount rate used were 10%. Example Suppose you were to collect $1 million in 5 years. Higher operating leverage results in a faster increase in profit once sales exceed break-even volume. The same happens with losses when sales fall below break-even volume. Discounted Cash Flow with an example. a software maker such as Microsoft. Extent to which fixed costs and variable costs are used in the production and marketing of products and services. Whether it sells one copy or 10 million copies of its latest Windows software.921.10)5 Compounded Annual Growth rate (CAGR) with an example. every additional dollar of sales revenue drops into the bottom line. In other words.Operating Leverage with an example. Microsoft possesses remarkably high operating leverage.33.32 (1 + 0.000.

and finally ended up at $19.2493. Your CAGR would be the ratio of your ending value to beginning value ($19. .500 by 2008.000. 1.000 in a portfolio on Jan 1.93% Thus. then $14.000 by 2007.000 = 1. your CAGR for your three-year investment is equal to 24. Let's say by Jan 1.95 raised to 1/3 power = 1.2493 is 24. 2006.500 / $10.Suppose you invested $10. 2005. (This could be written as 1. representing the smoothed annualized gain you earned over your investment time horizon.2493 . then subtracting 1 from the resulting number: 1.2493 Another way of writing 0.95^0.1 = 0.95) raised to the power of 1/3 (since 1/# of years = 1/3).93%.3333). your portfolio had grown to $13.