Copyright 2002, Professor Jerome M. Katrichis




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B. 2. Cost History

The purpose of this section is to determine if there are any long term or recent trends in costs for your firm and your industry. In most industries there is a fairly predictable slow but steady cost inflation pressure. Such inflation tends to act as a stimulus to sales as there is a natural pressure to purchase before prices go up.

In many technology related industries there is a constant reduction in costs. This can cause a couple of problems. It puts pressure on buyers to delay purchases and may result in dwindling profit margins for producers, especially in very competitive markets.

If possible, you will want to break costs out into categories to determine where they are being driven up. For instance, the costs associated with customer service, or sales forces may be going up while other costs are being held constant or dropping. Such category differences will have implications for your marketing tactics later in the plan.

When dealing in several different nations, inflation pressures will also vary considerably as will the costs associated with currency exchange as the relative values of currencies change.





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