A world where everyone is a different color & Marketing beauty care product here.

Let's imagine a world where the target customers are of a different color. The story of that world begins as follows;

Once upon a time, in a world unlike any other, every person was a different color. Some were bright some were red, some were green, others were deep blue, and still, others were sunshine yellow, and so on. The world was filled with color and life; everyone had a unique personality.

One day, a young child named Lily was born into this world. She was a soft shade of lavender, a color that no one had ever seen before. Lily was fascinated by all the different colors around her, and she loved to explore and meet new people. However, as she grew older, Lily noticed that not everyone appreciated the differences in color. Some people thought that their color was better than others, and they refused to play or interact with those who looked different.

One day, while playing in a park, Lily met a bright orange girl named Ruby. Ruby was very shy and kept to herself, and Lily noticed that other kids didn't want to play with her because of her color. So, Lily decided to befriend Ruby and together, they went on an adventure to explore the world around them. 

As they journeyed through the world, they met people of all colors, some were kind, while others were mean. They learned that although they looked different on the outside, they were all the same on the inside. They all had hopes, dreams, and feelings, and they all deserve to be treated with kindness and respect. Lily and Ruby became great friends and they decided to spread the message of love and acceptance throughout their world. They started by organizing a picnic in the park, where everyone was welcome, no matter what color they were. Slowly but surely, more and more people began to see the beauty in their differences, and the world became a happier, more colorful place. From that day on, Lily and Ruby continued to spread their message of love and acceptance throughout the world. They made new friends of every color, and together, they celebrated the beauty of diversity and the power of kindness. In the end, the world became a happier, more peaceful place, where everyone was accepted and appreciated for who they were. And Lily and Ruby knew that they had helped to create a world that was a little more colorful, a little more beautiful, and a little more loving.

Market strategies for promoting a beauty care product in this world

Since everyone here has a different color of skin and different personality and at the same time, also some level of discrimination exists here, we should not make our marketing strategies for the short run because everyone thinks that their skin is better. So, we need to spread awareness initiatives regarding skin health and wellness in society. Also, we could not target the individuals. That means we can target our market under the umbrella of self-love and educate everyone that skin is skin whether it is red or green or some other color. Hence, we need to make strategies for long-term benefits. Yeah, the Initial burn will be more but in the long run, we can expect good ROI.

Here are a few ways we could promote our beauty care products in this world:

• Emphasize the benefits: Regardless of skin tone or color, everyone wants to feel good about themselves and look their best. For this, we need to market our products in such a way that customers can see the values that we want to serve them, such as how our product can improve skin texture, reduce blemishes, or enhance natural beauty.
• Using inclusive language and imagery: Make sure the marketing materials use inclusive language and imagery that represents a diverse range of people. This will help make the brand more relatable to a wider audience and show that your products are designed for everyone.
• Highlight versatility: Showcase how the products can be used in multiple ways, which can appeal to a wider audience. For example, we could highlight how the lip balm can also be used as a blush or highlighter, or how the facial mist can be used as a toner or setting spray.
• Host events that celebrate diversity and inclusion and showcase how the company's products can enhance the natural beauty of people of all colors. For example, you could host a beauty fair that includes FREE makeup tutorials and demonstrations for people of different skin tones and colors.
• The key to covering the masses with beauty care products is to focus on the common needs and desires of your target audience while celebrating diversity and inclusivity. By doing so, we can create a brand that appeals to a wide range of people while still promoting the message of self-love and acceptance that is so important in this world.
• Last but not least, we can promote our products by doing influencer marketing with Lily because she has face value now which we realize at the end of the story. 

Of course, we can target a large community with a different product line but in long run, In my opinion, the above strategies suit the most. 

Do you have different views and strategies? Please share in the comment section.

"India and China: Collaborators or Competitors in the Global Lithium and Energy Storage Market"?

The discovery of a lithium mine in Jammu and Kashmir is a significant development for India's emerging lithium industry. The mine has an estimated reserve of over 5.9 million tonnes of lithium, making it one of the largest lithium deposits in the world. This discovery could potentially transform India's lithium industry, reducing the country's dependence on imports and creating opportunities for domestic lithium production and value addition.

India and China are two of the world's largest and fastest-growing economies, and both countries are actively pursuing the development of their domestic lithium and energy storage industries. While there are certain areas of competition between the two countries, there are also opportunities for collaboration and mutual benefit.

Let's start by examining the global lithium and energy storage market as it stands right now. The global lithium-ion battery market was estimated at $36.7 billion in 2019 and is anticipated to reach $129.3 billion by 2027, rising at a CAGR of 18.0% from 2020 to 2027, according to a report by Allied Market Research. With almost 49% of the global market share in 2019, Asia-Pacific is the region with the greatest market for lithium-ion batteries.

China currently dominates the global lithium-ion battery market, accounting for around 70% of the world's total production capacity. Chinese companies such as CATL, BYD, and Guoxuan High-Tech are among the world's largest lithium-ion battery manufacturers. The Chinese government has made significant investments in developing the country's domestic lithium and energy storage industries.

But, the discovery of a lithium mine in India has stimulated interest in the growth of the domestic lithium sector. India, on the other hand, is a relative newcomer to the lithium and energy storage business. The growth of the nation's energy storage business has also received more attention as a result of the Indian government's "Make in India initiative", which attempts to encourage domestic production and lessen the country's reliance on imported commodities.

Therefore, in the global lithium and energy storage business, are China and India allies or rivals? The response is both. Between the two nations, there is undoubtedly competition, but there are also chances for cooperation and mutual gain. In the lithium and energy storage sectors, India and China may cooperate in the following areas:

• 

  Investment and technology transfer: Chinese businesses and investors may make investments in the growth of India's indigenous lithium industry, contributing money and knowledge to hasten growth. The two nations might be able to transfer technologies more efficiently as a result, and India might benefit from China's knowledge and experience in the lithium and energy storage sectors & collaboration has begun. For example, in 2020, China's CNOOC signed a deal with India's L&T to explore opportunities in the lithium-ion battery sector. Additionally, several Chinese battery manufacturers have established partnerships with Indian companies to manufacture lithium-ion batteries in India. These investments could help accelerate the growth of India's domestic lithium industry, while also providing Chinese companies with access to India's large and growing market.

• Supply chain collaboration: India and China both rely on imported raw materials for their lithium and energy storage industries, and there are opportunities for collaboration in the supply chain to ensure reliable and affordable access to these materials. This could involve joint investment in mining and processing facilities, or strategic partnerships with other countries to secure access to raw materials. For example, China is the world's largest consumer of lithium, but it imports nearly all of its lithium from other countries, including Australia, Chile, and Argentina. Similarly, India imports the majority of its lithium from countries like Chile, Argentina, and Australia. By collaborating on the supply chain, the two countries could potentially secure reliable and affordable access to these raw materials, reducing their dependence on imports and strengthening their domestic industries.

• Research and development: China and India both have strong capacities in this area, and there are chances for cooperation in the creation of advanced lithium and energy storage technologies. This can entail teaming up with universities, research organizations, and commercial businesses on research projects, sharing knowledge, and collaborating.

What if they do not come together?

There may be a number of repercussions for both nations as well as the world market if India and China do not cooperate in the lithium business. For example;

• India and China would each have to rely on their own resources and knowledge to compete in the lithium market in the absence of cooperation. Due to the need to repeat efforts in areas like battery technology research and development, this might potentially result in a fragmented and less effective market.
• without cooperation, there may be more competition for lithium resources, especially in nations like Bolivia, Chile, and Argentina, which are the main producers of lithium on a worldwide scale. This might increase the cost of lithium and make it more challenging for businesses in both nations to get access to the resources they require.
• Without cooperation, India and China may find it more challenging to compete in the global lithium market, especially against North American and European companies that are also making significant investments in battery technology and renewable energy.
• Without cooperation, India and China would lose out on the chance to build a more sustainable and fair lithium sector. 

Overall, the lithium and energy storage sectors offer significant opportunities for India and China to work together. While there is undoubtedly competition between the two nations, there are also chances for cooperation and mutual benefit. Working together, the two nations may be able to spur scientific advancement, advance the lithium and energy storage industries, and profit from the rising demand for clean energy solutions around the world. Cooperation might help both nations create environmentally friendly production techniques and guarantee that stakeholders in the lithium business benefit from its advantages more fairly.

What do you think? should they come together or rivalry is key to success for them??

Why the 4P’s of marketing are no longer enough: The evolution of 7P’s

 Introduction

Marketing is the process of identifying and satisfying customer needs profitably. It is an essential aspect of any business, whether big or small as it helps to promote and sell products or services to a target audience. In today’s digital age, marketing has evolved tremendously, and businesses need to adapt to current market trends to remain in the competition. 

The traditional 4Ps of marketing, include product, price, place, and promotion. However, marketers have realized that this mix is not enough to effectively compete in the modern business landscape. As a result, they have started using the 7P’s of marketing which include people, process, and physical evidence.

In this blog, we will discuss why the 4Ps are not enough and why marketers are using the 7Ps.

Traditional 4P’s of Marketing Mix

• 
  Product: This is the very first element of the marketing mix. This refers to the physical or digital goods or services that are being offered to the customers. The product should be designed to meet the need and wants of the target audience, as well as differentiate itself from competing products in the market. Factors to be considered when developing the products include their features, designs, quality, branding, and packaging.
• Price: This refers to the amount that customers are charged for a product. Setting the right price is important because it affects the perceived value of the product and the profitability of the company. Factors to be considered when setting the price include the cost of production, the demand for the product, and the target audience’s willingness to pay. 
• Promotion: The third element of the marketing mix is promotion, which refers to the various methods used to communicate the value of the product to the target audience. It is simply putting the image of the product in the customer’s mind. Promotional activities can include advertising, sales promotions, personal selling, public relations, direct marketing, email marketing, etc.
• Place: this refers to the distribution channels used to get the product to the customers. This includes both physical and digital channels, such as retail stores, online marketplaces, and the direct to customers sales. The factors to consider when choosing distribution channels include the target audience’s buying habits, the level of competition in the market, and the costs associated with each channel.

Three New addition of P’s of Marketing Mix

• People: This refers to the individuals or groups involved in the delivery of the products or services. This includes the employees, management, and any other stakeholders who are responsible for the creation, marketing, and delivery of the products. It is important to consider the skills, knowledge, and attitudes of these individuals and how they can impact the overall customer experience. This includes factors such as employee training, customer services, and communications.
• 
  Process: This refers to the set of activities or steps that are involved in the creation, delivery, and support of the products or services. This includes the processes used to manufacture or produces the product, and the steps involved in customer services and support. It is important to evaluate these processes to ensure that they are efficient, effective, and aligned with the overall goals of the marketing strategies.
• Physical evidence: This refers to the tangible elements that customers can see, touch, or experience when interacting with the products or services. This includes factors like the physical environment where the product or services are delivered, the packaging and the branding of the products, and any other physical evidence that can influence the customer’s perception of the products or services. It is important to ensure that these physical elements are aligned with the overall marketing strategy and reinforce the desired brand image or positioning.

Modern Market Trends & Evolution of 7P’s

• Globalization: The growth of international trade and the increasing interconnectedness of the global economy means that businesses need to consider cultural differences when developing their market strategies. This edition of People to the marketing mix allows businesses to consider the specific need and preferences of different cultural groups.
  
  
  
• Personalization: With the evolution of competition in the market, customers expect personalized experiences, and the business need to deliver personalized marketing messages. Personalization can be achieved through data analysis and segmentation, which enables businesses to target a specific group of customers.
• Evolution of mobile marketing: More and more people are using mobile devices to access the internet and for personalized marketing. Therefore, businesses need to ensure that their website and marketing campaigns are optimized for mobile devices.
• Influencer marketing: Social media influencers have become a powerful force in marketing. Businesses can leverage influencers to promote their products or services to their followers.
• Video marketing: Video content is becoming increasingly popular, with platforms like YouTube, TikTok, etc. gaining millions of users. Businesses can use video marketing to engage with customers and showcase their products and services.
• Services Design: Service design is a relatively new concept in marketing, but it has become increasingly important in recent years. The addition of Process to the marketing mix allows businesses to design their services with the customers in mind, leading to a more seamless and enjoyable customer experience.
• Sustainability: Customers are becoming more conscious of the impact their purchasing decisions have on the environment. Therefore, businesses that prioritize sustainability and eco-friendliness can appeal to environmentally conscious customers.
  
  
  
• Increased competition: One of the primary reasons why 4P’s are not enough is the increased competition in the market. There are more products and services available to customers than ever before, which means businesses need to work harder to stand out. The addition of new P’ (People, Process, Physical evidence) allows businesses to create a more comprehensive marketing strategy that takes into account all aspects of customers' experience. Because the modern market has set a trend of customer experience and hence marketing should also roam around this where three new additional P’s can help businesses to provide experiential marketing this marketing strategy is called customers centric approach. This in, turn, leads to increase customer loyalty and a better reputation in the market.
• The increased importance of services: In today’s economy, services have become just as important as the product itself. The addition of people and processes to the marketing mix allows businesses to focus on creating a service experience. This leads to increase customer satisfaction and a better reputation for the business.
• Digital Transformation: The rise of digital technologies has completely transformed the business landscape. The addition of Physical evidence to the marketing mix allows businesses to create a digital presence that is just as important as their physical presence. This, in turn, leads to increased brand awareness and better loyalty to the customers.

Conclusion

The 4Ps of marketing were an effective framework for their time, but the modern business landscape requires a more comprehensive approach. By adding People, processes, and Physical evidence to the marketing mix, businesses can create a more personalized, customer-centric experience that leads to increased brand loyalty and awareness. By staying up to date with the current marketing trends and implementing the 7Ps of marketing, businesses can create successful marketing strategies that appeal to their target audience.

Revolutionizing Learning and connecting with ChatGPT, the AI-powered chatbot

 

 Introduction

Artificial intelligence (AI) is transforming the way we live, work, and learn, and one of the most exciting applications of AI is the rise of chatbots. Chatbots are computer programs that can simulate human conversation, and they are becoming increasingly sophisticated over time. One of the most impressive chatbots on the market today is ChatGPT, a large language model developed by Open AI. The full name of ChatGPT is Chat Generative Pre-Trained Transformer.

In this blog post, we will explore how ChatGPT is changing the game when it comes to learning and connecting, and how we can use this innovative tool to our advantage.

 

                            Benefits of ChatGPT

• Accessibility: ChatGPT provides easy and quick access to information, making learning and research more accessible to everyone. Whether you’re a student, professional, or just someone curious about a topic, ChatGPT can help you to find the information you need in the most suited way.
• Convenience: ChatGPT is available 24/7, so you can ask it any questions or engage in conversation at any time. This is incredibly convenient for busy people who want to learn or connect with others but may not have the time or resources to do so.
• Personalization: ChatGPT can be customized to suit your specific needs and preference. This means that you can get personalized responses and recommendations based on your interests and goals.
• Learning” ChatGPT is constantly learning and improving, which means that t it can provide better and more accurate information over time. This makes it an incredibly powerful tool for learning and research.
• Empowerment: ChatGPT empowers people by providing them with the knowledge and resources they need to make informed decisions and take action. This is particularly important in t0days fast-paced world, where accurate information can be hard to come by in a shorter period.

 

Other benefits of ChatGPT

• Language Learning: ChatGPT can help you learn a new language by providing immediate grammar, pronunciation, and vocabulary feedback. This is particularly useful for people who may not have access to language classes or tutors due to various reasons.
• Mental Health Supports: ChatGPT can provide mental health support and guidance to those who may be struggling with emotional distress or mental health issues. This is particularly useful for those people who may not have access to traditional mental health services or who may be hesitant to seek help from a human therapist due to social status or due to introverted personality.

 

Note: There are so many benefits of using ChatGPT.

Since it is in the development phase, it has so many limitations but in near future, it is going to be revolutionized as one of the most powerful AI tools.

                     Common myths about AI Like ChatGPT in Educational Institutions

Some academicians and some educational leaders say AI like ChatGPT is dangerous to students’ future. But the reality is in contrast to this statement. AI like ChatGPT has enormous potential to enhance and transform the way students learn.

• Future readiness: World is changing, so the traditional way of teaching and learning must be changed. As AI becomes increasingly prevalent in the workplace, students who have experience with AI technologies like ChatGPT will be better equipped to succussed in the future job market.
• Enhanced collaboration: ChatGPT can facilitate collaborative learning by allowing students to work together on projects and assignments to perform them better. That is Students can use ChatGPT to brainstorm ideas, discuss concepts, get feedback from peers on the same projects, and even evaluate the content. ChatGPT can help in suggesting the content matter and even can hello in identifying gap areas to improve them. It's all about how you are using it, not everyone can use technologies like ChatGPT ineffective way for the same you need to be a smart mover.

*Another common myth is that some academicians argue that technologies like ChatGPT can replace human teachers. Still, ChatGPT can complement traditional teaching methods, providing additional support to teachers and allowing them to focus on more personalized interactions with students.

 

                                                               Conclusion

ChatGPT is a game changer when it comes to learning and connecting. Its accessibility, convenience, personalization, learning capabilities, and empowerment make it an incredibly valuable tool for anyone looking to expand their knowledge ad achieve their goals. Whether you are a student or a professional, you should learn new technologies like ChatGPT to stand with the changing world otherwise you will be left out in real-time. By working together, we can find ways to leverage AI like ChatGPT to enhance and transform the learning experience for students or anyone while still upholding the values and principles of traditional education.

Aren’t we already using other robots and AI in our daily life or even in educational institutions? If yes means why not ChatGPT?

 

 

Innovation for safety and Sustainability: The Brand loyalty Vision of VOLVO

Volvo Cars is a Swedish automobile brand that was founded in 1927. From the very beginning, it is known for producing high-quality, safe, and innovative vehicles that include Sedans, Wagons, SUVs, etc.  Volvo has a reputation for introducing advanced technology and innovative designs into its cars and among these Safety has a high degree of preference. Volvo is known as a respected automobile industry and has a strong commitment to safety and sustainability.

Three-Point Seat Belt

In the era when everyone was competing with each other to become a superpower in the automobile sector like the internet today, the most common issue was the safety of passengers. And here Volvo enters into the game, it came up with the coolest yet simple innovation called the three-point seat belt which was like a miracle for the automobile sectors as it was a concern for human safety. With this innovation, Volvo could make itself an automobile leader in terms of safety as it was the most desirable demand of the time. But Volvo did nothing like this and they chose humanity over profit and race to become a superpower.

Volvo always cares about its users and here is another contribution of the company toward human life and safety. They invented laminated glass plates

Laminated vs Tempered glass

that do not shatter easily like other simple glass that ensures the safety of people again during the crash. They did not stop here, selflessly they shared 40+ years of research data related to safety and excellence with their competitors make it sure that they also could take initiative to make vehicles that deal with safety first. Since we are talking about the safety model of Volvo, how can we forget the "XC90 model" of Volvo, apart from its engine and other features, it is best from a safety perspective too. It

The science behind laminated glass

received a five-star rating in the Euro-NCAP(New Car Assessment Programs) crash test which is rare for many other brands of cars. Volvo operates its business on the "Conscious capitalism principle" in simple terms says business making money but the activities it involves to make money should harm society and its people.

In conclusion, Volvo has a long-standing reputation for safety, and its continuous commitment to these above-mentioned values is reflected in its innovation and business models. So, we can say, for Volvo, safety is not just a word, it's a commitment to society, it's a way of life. This is the best way to gain "brand loyalty". Is this not the best way to gain brand loyalty in the long term?

#Safety means VOLVO

Some most used marketing jargons.

 

1. Cashcows: It can be any product or a business of a company that is generating an enormous amount of revenue than other products or businesses. It generates a steady return on profits, which can be used to finance the development of other products or business ventures. For example, for Nestle, Maggi can be a cash cow.

2. Marketing Blitz: Let's understand it by an example. Suppose a company launches a product and for the same, they are marketing about the product very aggressively, then it is called a marketing blitz. They put concentrated effort to promote a product or service through a variety of marketing channels over a short period of time. For example, an awareness program for covid-19 by the government of India

3. Yuppies: It is a customer segment where individuals do jobs, leaves good life, and make their own decision on buying. In another word, they are financially successful individuals in their 20s and 30s who lived and worked in urban areas. Yuppies were often characterized as being highly motivated, career-focused, and materialistic, and were seen as driving the consumer culture of the time. They were known for their high disposable incomes and tended to spend money on luxury goods and experiences. For example, individuals doing white color jobs.

4. Henry's: In this category of customers or individuals have high income, and they love to spend on luxury items but they are not rich though. A large amount of income goes to their cost of living.

5. Panks: Pank is defined as "Professional aunts with NO kids". This category of professionals are bachelors having no kids but who love to spend on their cousins and nephews.

6. Cutting-edge technology: Cutting-edge technology refers to the most advanced and innovative technology currently available. This can include new developments in fields such as artificial intelligence, big data, quantum computing, 5G, blockchain, and more. Cutting-edge technology is often characterized by its ability to solve complex problems, increase efficiency, and drive new breakthroughs in various industries. These technologies are considered to be at the forefront of their field and are often the most advanced and innovative when compared to existing technologies. For example, suppose there is an XYZ company and its competitor is ABC, and ABC is using the latest technologies than XYZ is using, then it can be said that ABC has cutting-edge technology.

7. A/B testing: A method used to compare two versions of a marketing campaign or website to determine which one performs better.

8. Branding: The process of creating and maintaining a consistent image and reputation for a company or product.

9. Click-through rate (CTR): A metric used to measure the success of an online advertising campaign is calculated by dividing the number of clicks on an ad by the number of times it was viewed.

10. Conversion rate: The percentage of website visitors who complete a desired action, such as making a purchase or filling out a form.

11. KPI (Key Performance Indicator): A metric used to measure the success of a marketing campaign, such as website traffic or social media engagement.

In conclusion, Marketing Jargon is a set of specialized language and terminology used in the field of marketing, it can be confusing but it is important for professionals to understand and use it to effectively communicate with colleagues and clients, and also to explain these terms in plain language for those who are not familiar with the industry.

#Terminology #Industry terms #buzzwords #lingo, #argon buster #marketing language #marketing vocabulary #marketing definitions.

What is Break Even Analysis? How to calculate it for a single product produced by a company? Importance of knowing Break Even Point.

Break Even analysis is a method that helps a company to determine whether the future product will be profitable or not and how many items have to be sold to have neither loss nor profit(BEP). It is the relation between the fixed costs, Variable costs, and revenue of the products.

An important responsibility of the engineer is to choose a manufacturing process that makes the required quality product at a lower cost possible. To fulfill both conditions, one would have to do a break-even analysis.

Important terms used for calculating BEA

·         Fix costs (f.c.):- These are the initial investments. This includes investment in equipment cost, rent, labor cost tool cost, etc which are required to process the product. This cost would be constant and does not vary with the quantity produced.

·         Variable cost (v.c):- Variable costs are the cost that will vary with the quantity produced. This cost includes the cost of raw materials, energy consumed, etc. The higher the number of items higher will be the variable cost.

·         Total Revenue (TR):- This is the amount for total sales of the product. It can be calculated by multiplying the total number of products by the prices of each product.

i.e. TR= total number of product/goods sold * average price of the product

·         Total cost (TC):- It is the total expenditure on the product to be produced.

  contribution margin:-It is also called gross margin. Basically, it indicates how a particular product is going to contribute to the overall profit of the company. It is calculated by sales price per unit minus variable cost.

Note

1.     1. At BEP there will be no loss, no profit

2.     2. As the number of production increases, the cost per unit produced decreases.

This is the fact that the fixed cost associated with production remains constant. i.e. From the same fixed cost equipment or other parameters, small or large quantity can be produced. Hence, overall cost decreases based on variable cost only.

The relation shows the basic formula of the Break even analysis

TC=f.c+v.c*n

Where,

n=quantity produced/sold

f.c=fixed costs

v.c=Variable costs

t.c=Total cost

Also, we know that

SP=cp+p

    =TC+p

    =(fc+vc*n)+P                                                   [ from above Total cost=fc+nvc)

n*Sp= fc+vc*n+p                         [Total selling price=sp*number of items sold)

nSp-nvc=fc+p

n=(fc+P)/(SP-VC)

n=(fc+P)/contribution              [Contribution is the number of earnings remaining after all direct costs have been subtracted from revenue]

By using this formula we can calculate the breakeven point for a single product produced by a company.

Calculation of BEP

If the engineer has to make a choice between two different processes for manufacturing a good, he/she may first estimate the Fc and VC of the process and then plot the tc graph. Let's understand by examples.

Example1

For better understanding let's assume the fixed cost is given as 30000. Likewise, assume variable cost is 200/unit of product. The company is planning to produce 40 identical products. The company is planning to get a profit of 10000. The selling price is 300per units.

we know the formula, the total cost company has to spend is

TC=fc+vc*n=rs3000+rs100*40=rs7000

So total sales= 300*40=rs12000

Contribution margin (CM)=total sale per unit –variable cost per unit

                                              =300-200=rs100/unit

Still, this 4000 is not the total profit because fixed cost payment still has to pay from the profit.

 From formula

n=  (fc+P)/contribution margin cost

n=(30000+10000)/100  = 400

This means if the company has to sell more than 400 items to gain 10000 profits.

Example2

A shopkeeper sells watches at 500 each. It cost 300 each to make as a variable cost. At the same time, the shopkeeper is paying 1000/month for his shop. His average sell is 10 watches a month.

Now let’s calculate whether he is gaining or losing.

Gross margin=500-300=200

From formula

n=(fc+P)/Gross margin=(1000+0)/200=5

So, the shopkeeper has to sell more than 5 watches to gain profit.

Importance of BEA

·        Pricing:-Break Even point will help to keep the better price of the product. This tool helps for providing the best price to gain maximum profit without loss.

·        Managing all fixed prices:-It helps to analyze all the fixed prices. It helps to review all the fixed prices constantly.

·        Reduce Chances of loss:- As we calculate the BEP, we have a general idea about pricing. We can arrange the process and other parameters accordingly.

·        Overcome competition:- we have all the necessary data to analyze market mood and play safely in the competitive markets.