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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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