Question

How can a firm use a cumulative expenditures curve--illustrating the firm's HISTORICAL pattern of product development costs--to guide/improve its future development efforts? (5 points)

Answer 1

consists of three lines
1. the average
2. early expenditures
3. late expenditures

the y-axis is the percent of expenditures (culmulative) and the x-axis is the percent of time spent till launch.

whoever develops a concept evaluation system needs to know what situation it is for. "spend your energy sharpening the edge of your knife, not polishing the blade"

cumulative expenditures curve

consists of three lines
1. the average
2. early expenditures
3. late expenditures

the y-axis is the percent of expenditures (culmulative) and the x-axis is the percent of time spent till launch.

whoever develops a concept evaluation system needs to know what situation it is for. "spend your energy sharpening the edge of your knife, not polishing the blade"

average curve

in the middle of the figure is a gradually upward sloping curve that represents the acculmulation of costs or expenditures on a typical new product project from its beginning to its full launch. it is just an average. doesnt need to reflect any one firm but it is typical of many durable consumer goods, nontechnical b to b products, and services.

early expenditures curve

representative of product development in technical fields, such as pharmaceuticals, optics, and conputers. R&D is a big part of the cost, and marketing costs are small.

the late expenditures curve

representative of a consumer packaged goods company.. technical expenses may be low, but huge tv advertisement is needed at the introduction