Page 62 - PM Integrated Workbook 2018-19

Chapter 2

 Growth stage

– Marketing and promotion will continue through this stage.

– In this stage sales volume increases dramatically, and unit costs fall as
fixed costs are recovered over greater volumes and variable production
costs per unit fall due to economies of scale.

 Maturity stage

– Initially profits will continue to increase, as initial setup and fixed costs are
recovered.

– Marketing and distribution economies are achieved but overall marketing
costs may increase to respond to increased competition.

– Variable production costs per unit fall further due to economies of scale
and learning effects.

Illustrations and further practice

Now try Test Your Understanding 6 and read Illustration 5 ‘Lifecycle costing’.

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