Mark 301 Midterm Crash Course Part 2 – Theory & Examples

This part covers only ROMI and CANN. with numerous examples

Note about CANN%a|b discussion towards the end:

In weird scenario: first you multiply the % given by Quantity of B, divide the resulting number by Quantity of A, to get CANN%a|b

Once you have that, you can operate under the normal scenario.

Further discussion:

CANNa|b = CANN%a|b x CONTa

Since we know CONT = CMxQ, then

CANN a|b = CANN%a|b x CM x Q

This means you can find CANNa|b by multiplying the correct CANN%a|b by Quantity to find the quantity cannibalized first, then multiplying that by CM to find your answer, OR by multiplying it by the Contribution (which is in dollars) directly. Both mean the same thing, it’s the portion of Product A’s CM that was cannibalized. I’m mentioning this because I mistakenly said “CANN%a|b is used for dollars amount” which is incorrect. You can use it to find the dollar amount portion of your CONT that was cannibalized directly, or multiply it by your quantity to find the cannibalized quantity, then multiplying that by CM to find the dollar amount of CONT that was cannibalized.