Principles of Marketing

Break-even analysis, as well as the study of the margin of safety for an entity such as New Shoe, can be based on collected revenues and associated costs. The Sole-mate business can determine shoe price levels by conceptualizing aspects of break-even analysis taking into account that the new shoe business requires determination of the amount of sales and prices that can lead to coverage of the total fixed costs incurred through sufficient analysis, different price levels based on prevailing demand of the product.

Nonetheless, the company’s management uses break-even analysis to determine the amount of shoes that the market can comfortably support. As such, break-even analysis delves into business fixed costs in relation to the amount of profit gained on each new shoe that is produced and sold. Therefore, a business that incurs lower fixed costs has lower break-even that is accounted for at the point of sale.

Subsequently, the break-even price = Variable cost +Fixed Expenses/Projected Units. The unit cost of the product is $95, the fixed expenses and allocated product development expenses is $ 600000 and projected units are 250000.Hence break-even price = $ 98.

Principles of marketing other than break-even analysis require businesses to conduct market research with attention on substitute products, which are potential sources of completion. Competition is an external market factor that every business has to devise strategies that ensure that the business remains able to support sustain its operations, make profits, and realize growth and development. In this view, one of the companies that have been challenged with setting its products prices is the McDonald’s Chain of restaurants. Fortunately, the business has been able to correct its prices by collaborating with many foodstuff suppliers to ensure that it never runs off the food supply, which translated, to higher costs incurred while incorporating new supply tenders.