random context I need to know Flashcards
1
Q
what is loss leader pricing
A
when a product is sold at a price that is LESS THAN it’s cost
2
Q
what is an advantage if this
A
- encourages consumers to where buy in an outlet they are likely to buy OTHER goods
3
Q
what does it mean by ‘other goods’
A
they have a high profit margin = overall the business makes a profit per visit
4
Q
what is the problem with loss leader pricing
A
people bulk buying = losing money
5
Q
under what circumstances will lost leader pricing work best
A
- making maximum purchases small e.g. paracetamol 2 at a time
- if the good is perishable
- choice architecture = encourages impulse buying
- high choice of products = exploit the customer discipline
6
Q
knock on effects of revenue focus
A
- make as many sales in long term = long term be profitable
7
Q
knock on effects of cash flow focus
A
increasing liquidity
8
Q
3 pros of having positive cash flow
A
- handle unforeseen events
- take advantage of opportunities
- able to expand business
9
Q
How to work out net cash flow
A
Inflows - outflows
10
Q
How to work out closing balance (cash flow forecast)
A
Net cash flow - opening balance
