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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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