Marketing Cost Analysis Essay

Business firms use s incessantlyal tools and techniques for merchandising control. The important ones among them are listed above. 1. marting audit 2. Market share analysis 3. market cost analysis 4. Credit control 5. Budgetary control 6. ratio analysis 7. Contribution margin analysis 8. Marketing Information inputs and warning signals 9. MBO way by objectivesMarketing cost analysis is another important tool of market control. In recent years, business firms all in all over the world have experienced steep escalations in their selling and distribution be. They have found, to their dismay, that change magnitude gross sales do not necessarily bring them increased profits. Containing marketing and distribution be has gravel 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 monetary co ntribution of activities or entities to the organization.Marketing cost analysis, or distribution cost analysis, is the analysis of costs that affect sales brashness, with the purpose of determining the positiveness of different segment operations. Profitability is determined by sales volume and its associated costs and expenses.The questions Marketing Cost psychoanalysis answers * Which customers/accounts are un advantageous because of order size or geographic location? * What is the minimum order size that can be filled profitably? * Which distribution ravish 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 requirement in controlling the marketing costs is to comprehend the components of the marketing costs and the methods available for their control.Benefits & Uses of Marketing Cost Analysis Careful and systematic marketing cost analysis confers a variety of benefits on the firm. * It becomes an integral part of the decision-making process. * Serves as the basis for management decisions.* Generates a sense of Accountability. * Determining which marketing strategies are the best. * Isolating problem areas. Objectives of Marketing Cost Analysis The major objectives of marketing cost analysis are to determine the isolated contributions made to profitability and to estimate the efficiency of all phases of the companys marketing structure in terms of corporate goals and objectives.Types of marketing Costs Marketing costs in modern, large-sized firms belong to a kaleidoscopic variety. There are ever so many components of the marketing cost and they vary in their significance, size, measurability and controllability. Generally, marketing costs are more dif ficult to measure and control, compared with other costs, such as material costs and manufacturing costs. Within the heterogeneous components of marketing costs, some are relatively more amenable for measurement and control than othersAnalyzing the costs by function The first step in marketing cost analysis is to gather the cost expand of the confused marketing function and analyze the function wise cost. For doing this, in the first instance various marketing activities have to be grouped into a few major and clearly identified functions. The marketing expenditure must be broken up over these functions.