Basic Financial Concepts

Unit sales – trade disc = NSV

Fixed and variable costs

Marketing costs

PSM Module 8 Business Analysis 1

 Sales forecasting
Sales vol = (Mkt size) x (% of mkt aware of prod) x (%
of mkt who try the prod) x (% of mkt who will rebuy)
x (no. of repeat purchases per yr) x (unit price)

Sales forecasting by:

Customer and market research
Jury of executive opinion
Sales force estimates
Look alike analysis
Similar products mapped

PSM Module 8 Business Analysis 2

 Sensitivity analysis
Reduction in competitor’s price after launch
- reduce own price
- spend more on marketing and promotion

PSM Module 8 Business Analysis 3

 Cannibalization
New Prod (Rs) Old Prod (Rs)

Unit S.P. 10 10.5

Unit Var cost 5 6

Unit Contribution 5 4.5

PSM Module 8 Business Analysis 4

 Cannibalization
To sell 20,000 units of New Prod
To sell 20,000 units of Old Prod

Diversion of 10,000 units from Old Prod

Loss of Re. 0.5 on sale of 1 unit
Loss of Rs, 5000 on sale of 10,000 units
Contribution from New Prod = 10,000 x 5
Net Financial gain = 50,000 – 5,000 = Rs 45,000
PSM Module 8 Business Analysis 5
 Research
Factor analysis

Regression - relationship between factors and

success/ failure

PSM Module 8 Business Analysis 6

 Assignment
Write down the factors for the success of a
product in the market.

PSM Module 8 Business Analysis 7