"Marketing Engineering" - Digest 2

Still in Chapter 5: strategic market analysis: conceptual framework and tools

There are two important concepts: product life cycle and cost dynamics: scale and experience effects


digest 1: S shape in product life cycle

* the picture is not from the book

digest 2: existing other shapes in product life cycle

* the picture is not from the book

Cycle-recycle pattern has been observed in drug products by Cox in 1967 and in Boeing 727 and 747.

digest 3: experience effects
C_q=C_n(q/n)^-b
where q= cumulative production to date
          n= cumulative production at a particular, earlier time
          b=learning curve
in practice, experience curves are characterized by their learning rate. Suppose that each tme experience doubles, cost per unit drops to 80 percent of the original level, then the 80 percent is known as the learning rate.
r=2^-b*100