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Home→The Westburn Dictionary of Marketing→E→experience effects

experience effects

Definition:
The decline in costs with cumulative production arising from (a) labour efficiency; (b) work specialization and method improvement; (c) new production processes; (d) better performance of equipment; (e) changes in the resource mix; (f) product standardization; (g) product redesign. The combined effects of experience are usually described in terms of an EXPERIENCE CURVE. In simple terms experience curves record the decline in costs to be anticipated with cumulative increases in output and are usually reported as a percentage for each doubling in output, e.g. an 85 per cent experience curve means that every time output doubles costs decline to 85 per cent of the earlier rate, i.e. a 15 per cent decline for every doubling of output.

Cross-References:
[experience curve]

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© Westburn Publishers Ltd 2002, The Westburn Dictionary of Marketing edited by Michael J Baker, ISBN 978-0-946433-01-8. www.themarketingdictionary.com. Entry: [Michael J. Baker], [1998].