Sem 1 Week 3b Flashcards
Financial Projections
What are the 2 types of financial Projections
-Sales projection: estimating customer interest in our product
-Expenditure plan: Understanding related costs
What are the 3 areas of financial projections?
-Expenditure
-Income
-Cash Balance
What is a bill of materials?
A comprehensive list of parts, items, assemblies, and other materials required to create a product
What is included in the BOM content?
-Product hierarchical structure (parent - child relationships)
-Quantities of child material in each parent product
-Production level of each material / sub-assembly
What is the first thing you do in the expenditure plan?
Estimate the cost of the product
What is the second thing you find in the expenditure plan?
Estimate non-product costs
What is the first thing you do in the sales projection?
Estimating product price :
-allocative effect on the demand
-Demand influences fixed costs
-Multiple drivers influencing the price
What is the second thing you do in the sales projection?
Estimating product price:
What are the drivers on pricing decisions?
-general economy status
-Positioning vs competitors
-Cost structure
-Product life-cycle
What is premium pricing?
Customer won by product’s perceived higher quality.
High prices throughout product lifecycle due to investments in the brand name and intangible assets
What is penetration pricing?
customers are won by product’s low price. Low prices are the key to penetrating the market and general demand.
What does cost-driven pricing mean?
Price calculated by adding an X% (profit increment)product’s cost
What is value-driven pricing?
price is based on value customer places on the product/service and fluctuate accordingly (e.g airline tickets in peak/ non-peak season)
What does sales projections: estimating market size mean?
calculating the target market size.
What are other forms of other income?
additional income
fixed income
independent from the volume of sales
