margin - markup stock turn stock productivity rose gmroi pricing markdown
TRANSCRIPT
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Margin - Markup Stock Turn Stock Productivity ROSE GMROI Pricing Markdown
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MARGIN In Laymans Language – How much
you get by selling goods worth Rs.100-
Eg.Vicks Vaporub cost price – Rs.20.83
Selling price – Rs.25.00 Difference Rs.4.17 i.e.16.64% is the
MARGIN
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MARKUP In Laymans Language – How much you
add to the cost Eg. Vicks Vaporub cost price Rs.20.83 You add 20% i.e.Rs.4.17. So the selling
price is Rs.25.00 Both MARKUP & MARGIN are talked,
expressed & written in percentage only.
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FORMULA MARKUP = (SP -CP) ------------ X 100 CP
MARGIN = (SP-CP) ----------- X 100 SP
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FIXED MARKUP STRUCTURE OF FMCG COMPANIES.
Eg. Hindustan Lever Limited a) 6.66% on TEA b) 8.00% on ALL SOAPS and DETERGENTS JAI and BREEZE 14% c) 10.00% on all other items d) 12% on SANITARY NAPKINS e) 15% on DIAPERS This is apart from cash discount, schemes, offers and
bargain if any. Eg. BROOKE BOND, RED LABEL MRP is Rs.181.00 How do you know the Cost Price
181/1.0666=169.70
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FIXED MARKUP STRUCTURE OF FMCG COMPANIES Eg. Proctor & Gamble a) 8% on SOAPS and DETERGENTS b) 10% on SHAMPOOS c) 12% on SANITARY NAPKINS d) 20% on MEDICINES & MEDICAL PRODUCTS Eg. TIDE 2 kg MRP - Rs.102.00 CP = ? TIDE 500g MRP - Rs. 26.00 CP = ?
This is item wise MARKUP, MARGIN with reference to FMCG Products
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NON MRP PRODUCTS Management has to decide the MARKUP, keeping in mind,
market practice, degree of competition and sales strategy. Eg. GROCERY- TURDAL- 100kg Bag-Rs.3200.00 Transportation- Rs. 16.00 per bag APMC 1%- Rs. 32.00 OCTROI- NIL __________ Total CP - Rs.3248.00 MARKUP-20% Rs. 649.60 Rs.3897.60 per 100kg Per kg price Rs 38.976 Rounded to Rs. 39.00
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MARKUP & MARGIN Varies from ITEM TO ITEM & sometimes from SKU TO SKU
JEERA CP = 80/-per kg MARKUP MARGIN
100kg Pack SP 12/- 50% 33%
500kg Pack SP 55/- 37.50% 27.27%
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HOW DO YOU KNOW THE AVERAGE MARGIN OF A STORE?
From Trading Account only.
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EROSION OF MARGIN a) Carriage inward. b) Packing Material & Shopping Bag. c) VAT d) Shortage (Invisible). e) Commission on mode of payment
(Credit Card, Sodex,etc)
d) Loyalty Schemes Why MARGIN varies from store to store??
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STOCK TURN Means rotation of STOCK in a year. FORMULA = SALES / Avg Stock
• Eg. Sale = Rs.12,00,00,000-
Opening Stock = Rs.50,00,000- Average Stock = Rs.50,00,000- Stock Turn = 24 Times Stock Turn is always expressed in No. of Times. This is the root of comparitive efficiency between
stores.
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STOCK PRODUCTIVITY How much Gross Profit is generated by
average stock. Gross Profit in retailing is generated by
cross force of MARGIN and STOCK TURN. This is called ROSE – Return on Stock
Employed. Formula – 1) MARGIN X STOCK TURN 2) (GP X 100) / AVG.STOCK
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GMROI FORMULA = (GP X 100) / Paidup
Stock GMROI > ROSE