Chapters:
f5
- Monday, October 5, 2009
- traces all cost 2 a product over its complete life-cycle.
- recognises, 4 many products, significant costs sre incurred at the early stages of its life cycle.
- protibility will be more accurate if all costs are taken into account.
5 stages:-
- Pre-production/ product developement stage: high level of cost will be incurred: r & d.....
- Launch / Market Development stage : extensive marketing & promotion costs.
- Growth stage : marketing n promotion will continue, sales volume will increase dramatically, units costs fall as fixed costs are recovered at a greater volume.
- Maturity Stage : profits will continue 2 increase as costs are recovered, growth of sales slow down, competitive.
- Decline Stage : Sales drop, replacement product will need 2 have been developed.
Implications:
- pricing : based on life-cycle costs rather than simply the costs for the current period.
- recognise the early stage importance of costs. better assesment of profit.
- helps minimise breakeven time, improve liquidity.
- recognise the imp of not delaying the launching of product which will affect the long run market share.
- better managment of products cash flow.
- max the lenght of life span.
0 extra marks:
Post a Comment