10.5

Question 1

cost effectiveness

Answer 1

most efficient way of designing and producing a product from the manufacturers point of view

Question 2

fixed costs

Answer 2

costs that have to be paid prior to production. do not change no matter the scale of production.

marketing, r and d costs, rent, salaries. these costs are spread out if more products are made

Question 3

variable costs

Answer 3

costs that will change based on scale, volume of production.

buying raw materials, labour costs, fuel prices etc

Question 4

total costs

Answer 4

u get it by calculating the fixed and variable costs. needed to understand if a product is gonna be viable to release into market

Question 5

break even point

Answer 5

the balance point of loss and profit. important to know number of products that need to be sold in order to cover total costs

Question 6

cost effective strategies for designers

Answer 6

minimise number of components

minimise production processes needed

use automated/low skilled processes

Question 7

cost effective strategies for manufacturers

Answer 7

economies of scale/buying in bulk, negotiating raw material prices

reduce waste

use automated processes

consider location of factories (cheaper rent etc)

Question 8

cost analysis

Answer 8

determines the feasibility of manufacturing a product, including the risks against the gains

Question 9

value for money

Answer 9

the relationship between what a product is worth and the money spent on it

Question 10

what affects value, perception of product?

Answer 10

potential benefits

features

brand reputation

emotion (how will product make client feel)

Question 11

cost

Answer 11

how much it takes to make a product. baseline for the price

Question 12

price

Answer 12

how much consumers are willing and able to pay for certain products. reflects products perceived value + profit the company determined it can receive

Question 13

factors that affect the pricing

Answer 13

market competition

supply and demand

brand reputation

marketing

Question 14

list pricing strategies

Answer 14

target costs

price minus

retail price

wholesale price

typical manufacturing price

return on investment

financial return

unit cost

sales volume

Question 15

price minus

Answer 15

market research is used to determine max price that customers will probably be willing to pay, prior to manufacture. decisions are made based on this

Question 16

retail price

Answer 16

price at which product is sold to customers

Question 17

wholesale price

Answer 17

cost sold by wholesaler (sellers of large quantities to retailers)
price is higher than what manufacturer sells it for, but lower than what retailer can sell it for (as more costs are added at each step of chain)

Question 18

typical manufacture price

Answer 18

total cost manufacturer is able to sell at. generally total cost is divided by number of products produced, and then profit margin is added

Question 19

target costs

Answer 19

desired final cost calculated prior to manufacturing. set profit margin is subtracted and we are left with the price constraint, around which decisions are made

Question 20

return on investment

Answer 20

measure of how profitable a product is – percentage of profit earned relative to cost of investment

Question 21

unit cost

Answer 21

total cost of one unit (including production storage, selling costs – both fixed and variable)

Question 22

sales volume

Answer 22

amount of products sold within a specific time frame (annual etc)

Question 23

financial return

Answer 23

profit made from sale of a product or investment of a company. total revenue - manufacture, distribution, marketing costs