Examples of profit in the following topics:
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- If the sole objective of a firm is to maximize profit, there are various profit maximizing pricing methods that can be used.
- There are several methods to maximizing profits:
- The purpose of profit-based sales target metrics is to ensure that marketing and sales objectives mesh with profit targets.
- Since total profit increases when marginal profit is positive and total profit decreases when marginal profit is negative, it must reach a maximum where marginal profit is zero - or where marginal cost equals marginal revenue - and where lower or higher output levels give lower profit levels.
- Recall formulas for calculating profit maximizing output quantity and marginal profit
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- While for-profit organizations exist to produce profit, non-profit institutions exist to benefit a society, regardless of whether profits are achieved.
- Non-profits are allowed to generate revenue, but must do so in specific ways to maintain their non-profit status.
- However, for-profit companies measure success in terms of the bottom line; that is, profitability, their ability to pay stock dividends or to repay loans.
- Despite their opposing objectives, for-profits and non-profits often come together to implement cause marketing programs.
- Cause marketing or cause-related marketing activities involve the collaboration of for-profit businesses and non-profit organizations for mutual benefit.
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- Profit maximization analysis is the process by which a firm determines the price and output level that returns the greatest profit.
- Profit maximization is the short run or long run process by which a firm determines the price and output level that returns the greatest profit.
- The profit-maximizing output is the one at which this difference reaches its maximum.
- The profit-maximizing output level is represented as the one at which total revenue is the height of C and total cost is the height of B; the maximal profit is measured as CB.
- This output level is also the one at which the total profit curve is at its maximum.
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- At the output level at which marginal revenue equals marginal cost, marginal profit is zero and this quantity is the one that maximizes profit.
- Since total profit increases when marginal profit is positive and total profit decreases when marginal profit is negative, it must reach a maximum where marginal profit is zero.
- In a non-competitive environment, more complicated profit maximization solutions involve the use of game theory.
- In this case, marginal profit plunges to zero immediately after that maximum is reached.
- This series of cost curves shows the implementation of profit maximization using marginal analysis.
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- It can also be a for-profit or non-profit corporation.
- Cooperative: Often referred to as a "co-op", a cooperative is a limited liability business that can organize as for-profit or not-for-profit.
- Information businesses generate profits primarily from the resale of intellectual property.
- Manufacturers create products from raw materials or component parts, which they then sell at a profit.
- They make a profit by providing sales or distribution services.
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- Non-profits' marketing strategies enable them to focus on maximizing revenues in order to reach their goals rather than for profits.
- However, non-profits may also focus marketing efforts on optimizing revenue.
- The primary difference between for-profit and non-profit organizations is that for-profit organizations try to maximize wealth, while non-profit organizations look to provide a greater good to society.
- Both not-for-profit and for-profit corporate entities must have board members, steering committee members, or trustees who owe the organization a fiduciary duty of loyalty and trust.
- Explain how the marketing strategies of non-profits differ from those of for-profit organizations
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- They also tell the final assembly division in Indiana that they must make a profit of 2,000.
- However, if they set this price too high then the Indiana division will not make their required profit, and the total company will have less of a profit.
- Each division must set a transfer price in which the company will be the most profitable and not based on each division being the most profitable.
- Division managers are provided incentives to maximize their own division's profits.
- The firm must set the optimal transfer prices to maximize company profits, or each division will try to maximize their own profits leading to lower overall profits for the firm.
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- Survival is closely linked to new product development, profit, sales, market share, and image.
- Making a $500,000 profit during the next year might be a pricing objective for a firm.
- All business enterprises must earn a long term profit.
- Lower-than-expected or no profits will drive down stock prices and may prove disastrous for the company.
- Just as survival requires a long term profit for a business enterprise, profit requires sales.
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- Product life cycles are a useful guide to lifetime sales and profits, and can help marketers understand what strategies to deploy & when.
- The two charts and demonstrate the break-even point reached during the product life cycle as well as sales and profits in general.
- They show that the product does not make much profit during early periods of the life cycle, meaning the maturity stage must be extended to maximise profits.
- The diagram shows the sales and profits of a given product during the course of the product life cycle.
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- During decline, sales growth becomes negative, profits decline, competition remains high, and the product ultimately reaches its 'death'.
- Profitability will fall, eventually to the point where it is no longer profitable to produce, and production will stop.
- A fall in prices and profitability (the latter ultimately moving in the negative zone);
- Profit increasingly becomes a challenge of production/distribution efficiency rather than increased sales.