Unit economics 

Lesson Details:

I: Introduction

A: How to write a business plan marketing strategy

In this article, I will discuss the importance of creating a business strategy to achieve the operational objectives for the next year. This will entail detailing the key aspects of business planning that are important for success in any business venture. I will begin by discussing the importance of having a sound marketing strategy for your organization along with the main objectives. I will then outline some of the key components of strategy implementation.

II: Body

A:  unit economics

The company should be able to understand how much their products or services cost to produce, market and distribute. This is referred to as the unit economics of the product line. The critical information needed to calculate unit economics is not always readily available, but can be researched using public tax records or other open-source financial data. The other major component of unit economics is the cost of goods sold (COGS). COGS refers to what it costs to produce your product or service. The other major cost factor in unit economics is the variable cost (VC) associated with producing your product or service. As its name suggests, VC refers to all costs that vary directly with the output volume of the business. The remaining cost factors are fixed costs (FC), which don't change based on product volume; and overhead costs (O/H), which are non-product-related expenses that must be paid regardless of volume. When you have accurate information about your costs, you can use it to calculate unit economics.

The first step in calculating unit economics is to determine the total cost of production, which includes all costs associated with producing one unit of your product or service. You can calculate this number by adding up the relevant cost factors for each category of expense, making sure to include any costs that vary with volume. For instance, if you are selling light bulbs, you would calculate your total cost of production by adding up your purchase price for light bulbs, labor costs associated with producing light bulbs, materials costs, distribution costs and other overhead expenses you incur when producing light bulbs. Once you have calculated your total cost of production, you can divide that number by the number of units produced to arrive at your total cost per unit. If you wish to compare your unit economics across different products or services, you will need to perform these calculations separately for each product or service.

The next step is to calculate the variable costs associated with producing one unit of your product or service. These are direct costs you are incurring at any given time during production. If you are selling light bulbs, for example, this would include expenses like electricity usage, raw material purchases and salaries paid to employees directly involved in producing light bulbs. Variable costs change as you produce more or less of your product or service; if you produce more light bulbs than last quarter, for instance, you will incur higher electricity and raw material expenses than if you had produced fewer light bulbs than last quarter. You can calculate variable costs per unit by dividing your total variable costs by the number of units produced during that period.
If you want to compare your unit economics across different products or services, you will need to calculate them separately for each product or service. To do this, start with the number of units produced and follow the same steps outlined above. The final step in calculating your unit economics is to add up all your variable and fixed costs and divide that by the total number of units produced. This gives you the average cost per unit for each product or service.

B:  strategic marketing objectives:

The strategic marketing objective represents what a firm wants to accomplish over a specific time frame through its marketing activities. It is usually expressed as a statement that starts with "To be (the best) (in our field), we (will focus on (target segment)) by (target date);." An example would be: "To be the best provider of holiday packages in Asia Pacific by 2020, we will focus on building a strong brand image in Singapore over the next two years." The strategic marketing objective describes a vision for a company's position in a particular market. It is a statement that describes where a company aims to be in future and helps guide day-to-day decision making. To achieve this vision, companies must have a clear picture of what they offer their customers and why they are better than their competitors'. They need a rationale that speaks to their audience and clearly defines what makes them different from their peers. A good strategic marketing objective should set out specific targets for growth over a defined period of time and motivate employees' daily activities. It should also be realistic and measurable so it can be used as a basis for performance evaluation and progress tracking. The SMO is a collective vision shared by a team and it must be focused on improving customer experience or meeting their needs more effectively. Because it is long term in nature, it requires patience and perseverance from everyone involved with it if it is going to be successful. In order to ensure that everyone working toward the SMO understands its significance and relevance for the organization as a whole, it should be communicated as early as possible in its development process and regularly thereafter at meetings and training sessions conducted by senior executives who support its mission.

C: Implementation strategies

1. Market Research Strategy: A market research strategy involves gathering information on competitors' strengths, weaknesses, opportunities and threats (SWOT) in order to develop effective strategies that address these issues while maximizing your own strengths within the marketplace. Gaining access to competitor information allows you to learn about potential opportunities in order to improve profitability and market share while avoiding any problems that could adversely impact your future business. Market research also allows you utilize competitor information to make educated decisions regarding pricing structure, market segmentation and product diversification among other things.

2. Pricing strategy: A pricing strategy should be based on pricing objectives that consider both short-term profitability and long-term competitive advantage while ensuring that prices are consistent with competitors' prices in order to maintain your existing customer base while attracting new customers. There are three main pricing strategies that may be used depending on whether you are trying to maximize market share, maximize profit or maintain market position while increasing profit margins while remaining competitive within the marketplace: Penetration Pricing : Low prices intended to attract new customers while keeping competitors at bay; Skimming Pricing : High prices intended to maximize profits while keeping market share low; Competition-Based Pricing : Prices intended to achieve maximum profitability within an acceptable range that keeps you competitive within the marketplace while increasing sales volume; Cost-Based Pricing : Prices intended to cover all costs associated with providing goods/services while maintaining an acceptable profit margin; Customer Value-Based Pricing : Prices intended to cover all costs associated with providing goods/services while providing additional value added features that appeal to targeted segments within the marketplace; Sales Volume-Based Pricing : Prices intended to maximize sales volume by setting prices high enough to allow high margins per sale but low enough to keep sales volume high; Strategic Alliances : Companies often pool their resources together in order to create new products/services that are beyond their individual capabilities or enter into exclusive contracts with other companies in order to gain access to new markets that they otherwise couldn't reach on their own; Oligopolistic Competition : Companies use price fixing in order to control price levels in an effort to maximize profits while minimizing losses due to competition; Cost Plus Pricing : Companies set prices based on their cost structures plus an acceptable rate of return on investment; Penetration Pricing : Companies attempt to reduce consumption rates among current consumers by lowering prices in order to increase consumption rates among non-consumers thereby increasing consumption levels overall; Employee Pricing : Companies offer discounts on goods/services provided through employee discounts; Consumer Group Pricing : Companies offer discounts on goods/services provided through volume discounts; Coupon Offers : Companies offer discounts on goods/services provided through coupon offers; Specials : Companies offer discounts on goods/services provided through trade promotions such as "Buy One Get One Free" (BOGO); Free Samples : Companies provide free samples of their goods/services; Cost Plus Pricing : Companies set prices based on their cost structures plus an acceptable rate of return on investment; Discounts: Companies reduce prices below cost in order to generate increased demand and favorable publicity; Allowances: Allowances refer to extra money provided by auto dealers when cars are purchased through auto finance companies; Manufacturer Rebates: Manufacturer rebates refer to discounts provided by manufacturers when certain products are purchased after being approved by mail-in rebate requests; Store Rebates: Store rebates refer to discounts provided by stores when certain products are purchased after being approved by mail-in rebate requests; Coupon Offers: Company coupons refer to discounts provided when certain products are purchased after being approved by mail-in coupon requests; Specials: Company specials refer to discounts provided when certain products are purchased after being approved by mail