Marketing 301 – Exam 3 – Marketing Math

1. A retailer’s gross margin on a $150 item is $40. Complete an

MCS (through GMC, including GMC %) for the retailer.

2. If a manufacturer decides to lower price by 10%, by how much will

it have to increase sales to keep the same total contribution if its
current GMC% is 30% and its per-unit COGS is $60?

3. How many additional units must a car dealer sell to cover a

$200,000 advertising campaign if its normal margin is $500 on a
$20,000 car?

As marketers, the Marketing Control Statement is a very helpful tool in

helping us understand how changes to the marketing mix can impact
our ability to capture value for the firm. This tool's value derives from
the following elements:

• It only reflects costs we control

• It only reflects cash value

• It changes the question from "how many do we think we can sell" to

"how many will we have to sell to justify the change?"

At this point in the module, you should feel comfortable building a MCS,
calculating and interpreting GMC and NMC, both at the dollar and the
percentage levels.

You should also feel comfortable using the formulas provided to interpret
how changes to price, product or promotion will impact the
organization's need for sales to justify a change to any or all of those
elements.
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