course hero the profit curve is the lowest in which stage of the product life cycle

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What happens during the maturity stage of the product life cycle?

During the maturity stage of the product life cycle, the sharp growth in sales begins to slow, and profits at the beginning of this stage decline. The most notable characteristic of this stage is the peaking of the product’s sales and profit curves.

What is the life cycle of a product category?

The life cycle of a product category is found to be longer. Electronic items, for example, will stay in the growth or mature stage for an indefinite period. We also find that some of the product categories have entered into the decline stage, such as VCP, while others are clearly in the growth stage, such as computers.

Why is the net profit of a product always negative?

Profit is zero or negative in this stage because of the heavy expenses of product introduction. With proper marketing, a product can go into the growth stage. During the growth stage, sales rise rapidly as consumers begin to accept the product.

What causes the profit curve to decline?

The combined effect of lower prices and higher costs results in a declining profit curve. In fact, during the latter part of the maturity stage, some competitors will withdraw their products because insufficient or no profits remain.

What is the product life cycle?

What is the introduction stage of a product?

What happens to the market after a shakeout?

What is a slow reducing distribution channel?

What is selling a product to a niche operator?

What is the goal of the introduction stage?

How are economies of scale realized?

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Which stage of the product life cycle is the least profitable?

Decline Stage In the decline stage, sales of the product start to fall and profitability decreases.

At which stage of the product life cycle will profits be highest?

maturity stageThe maturity stage of the product life cycle is the most profitable stage, while the costs of producing and marketing decline.

What are the 5 stages of product life cycle?

The product life cycle is the progression of a product through 5 distinct stages—development, introduction, growth, maturity, and decline. The concept was developed by German economist Theodore Levitt, who published his Product Life Cycle model in the Harvard Business Review in 1965. We still use this model today.

In which stage of the product life cycle there are no profits?

Decline. Eventually, a time comes when the company is no longer making a profit from the product. This stage can often be identified by the fact that not only are their products selling less but their entire market has shrunk.

In which phase of the product lifecycle are operating profits the lowest even as revenues are increasing?

decline: The stage of the product life style where low/negative sales growth, lower profits, and maximum competition occur, forcing the product into decline and 'death'.

What are the 4 stages of product life cycle?

A product's life cycle is usually broken down into four stages; introduction, growth, maturity, and decline. Product life cycles are used by management and marketing professionals to help determine advertising schedules, price points, expansion to new product markets, packaging redesigns, and more.

Which of the following is a stage of product life cycle Mcq?

There are four stages in a product's life cycle—introduction, growth, maturity, and decline.

What is maturity stage?

maturity stage. Definition English: Longest period in the life cycle of a firm, industry, or product, during which sales peak and start to decline. In economics, the final stage of economic growth characterized by high level of mass consumption.

What is decline stage in product life cycle?

the final stage of the product life cycle (after introductory stage, growth stage and maturity stage) when sales are dropping because the original need and want have diminished or because another product innovation has been introduced. See: Product Life Cycle.

What is maturity stage in product life cycle?

If your product or service makes it to the maturity stage, this should be the longest part of its product life cycle. At this stage, you will probably notice that: you may need to enhance product features to make it more appealing than competitors' you may need to lower your pricing due to increased competition.

Which stage in the product life cycle is usually the longest?

The maturity stageThe maturity stage is usually the longest of the four life cycle stages, and it is not uncommon for a product to be in the mature stage for several decades.

Which of the following are product life cycle extension strategies Mcq?

Which of the following is/are product life cycle extension strategies? Market development.

In which of the following stages of the product life cycle do profits peak quizlet?

During the market growth stage of the product life cycle, industry profits usually reach their peak and begin to decline.

At what phase in the product lifecycle is forecasting most important?

Instead of projecting a steadily increasing demand, you have to switch to a forecast that predicts a more gradual increase. Eventually, during this stage, you reach peak sales. This stage of your product life cycle is also known as market saturation, and when you reach it, you have to forecast steady demand.

Which stage in the product life cycle often sees a business spending a lot of money on advertising?

Benefits of the Growth Stage Reduced Costs: companies usually spend a lot of money on product development and marketing in the introduction stage. In contrast, the growth stage is profitable as the sales are high and growing.

At which stage in the PLC do profits increase as promotion costs are spread over a large volume and as the firm enters new market segments?

Profits increase during the growth stage, as promotion costs are spread over a large volume and as unit manufacturing costs fall. The firm uses several strategies to sustain rapid market growth as long as possible.

Product Life Cycle Explained: Stage and Examples - Investopedia

Product Life Cycle: The product life cycle describes the period of time over which an item is developed, brought to market and eventually removed from the market. The cycle is broken into four ...

What is the product life cycle?

The Product Life Cycle (PLC) defines the stages that a product moves through in the marketplace. Oligopolistic Market The primary idea behind an oligopolistic market (an oligopoly) is that a few companies rule over many in a particular market or industry, as it enters, becomes established, and exits the marketplace.

What is the introduction stage of a product?

1. Introduction Stage. When a product first launches, sales will typically be low and grow slowly. In this stage, company profit is small (if any) as the product is new and untested. The introduction stage requires significant marketing efforts, as customers may be unwilling or unlikely to test the product.

What happens to the market after a shakeout?

Eventually, the market grows to capacity, and sales growth of the product declines. In this stage, price undercutting and increased promotional efforts are common as companies try to capture customers from competitors. Due to fierce competition, weaker competitors will eventually exit the marketplace – the shake-out. The strongest players in the market remain to saturate and dominate the stable market.

What is a slow reducing distribution channel?

Slowly reducing distribution channels and pulling the product from underperforming geographic areas. Such a strategy allows the company to pull the product out and attempt to introduce a replacement product.

What is selling a product to a niche operator?

Selling the product to a niche operator or subcontractor. This allows the company to dispose of a low-profit product while retaining loyal customers.

What is the goal of the introduction stage?

The underlying goal in the introduction stage is to gain widespread product recognition and stimulate trials of the product by consumers. Marketing efforts should be focused on the customer base of innovators – those most likely to buy a new product.

How are economies of scale realized?

Economies of scale are realized as sales revenues increase faster than costs and production reaches capacity. Competition in the growth stage is often fierce, as competitors introduce similar products. In the growth stage, the market grows, competition intensifies, sales rise, and the number of customers increases.

How many stages are there in the product life cycle?

As shown above, the product life cycle has 4 very clearly defined stages, each with its own characteristics that mean different things for business that are trying to manage the life cycle of their particular products.

What is the decline stage of a product?

Decline Stage – Eventually, the market for a product will start to shrink, and this is what’s known as the decline stage.

Why do companies invest in new product development?

Because most companies understand the different product life cycle stages, and that the products they sell all have a limited lifespan, the majority of them will invest heavily in new product development in order to make sure that their businesses continue to grow.

What is the purpose of knowing what stage a firm's product is?

Knowing what stage a firm’s product is can help strategize accordingly for product related actions or decisions to undertake.

What is the purpose of the maturity stage?

Maturity Stage – During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market share they have built up.

What does it mean when the size of the market for a product is small?

The size of the market for the product is small, which means sales are low , although they will be increasing.

What is the growth stage of a company?

Growth Stage – The growth stage is typically characterized by a strong growth in sales and profits, and because the company can start to benefit from economies of scale in production , the profit margins, as well as the overall amount of profit, will increase.

What is product life cycle?

Every product has a definite life and in business through the various stages of the product life cycle. So we measure its performance and success rate in the market. This means that when a new product has been developed then it would pass through the product life cycle (PLC). Basically in which it would show different levels of sales and profit. The business organization has the desire to cover all the risks and efforts made in developing and selling that product. Thus product life cycle includes different products having different life cycles depending on their demands. Along with changing trends in the markets.

What is the fourth stage of the product life cycle?

Maturity . It is the fourth stage of the product life cycle in which the product enters into the stage of maturity. The sales start diminishing and new challenges come in front of the business management. Most of the products in the markets are passing through the maturity stage.

How many stages of a new product are there?

Some products quickly become obsolete, like related to IT. On the other hand others have longer duration of useful life. However every new product is passed from the five stages. So in which the sales and profits show different proportions. Thus the business should adopt certain strategies relative to the feasibility of each stage.

Why is the introduction of a new product so slow?

Introduction of a new product is a slow process. As most people have not any awareness about the features of the new product of the business. Therefore the sales are low and the profit is negative. The business spends money on the distribution and promotion aspect of the product.

How does increasing sales and profits affect the level of competition?

The increasing sales and profits start attracting new investors. In fact that result in increase in the level of competition. The price of the new product in the market is relatively stable resulting in little decline. Business is also facing competition so more efforts are made to improve the distribution.

What is product development?

Product Development. It is the first stage of the product life cycle in which the business starts the process of new product development. In addition that includes idea generation, conversion into product concept. So that resulting testing and the actual physical development of the product.

Why are new distributors captured?

New distributors are captured for the effective distribution to every distinct place of the market. As the new product is not famous and the profits are low. So the rate of competition is also low at this stage. The marketing strategy used by the business should be in accordance with its positioning strategy.

When a product is commercialized, what stage of the life cycle is it?

When a product is commercialized, the product will enter the introduction stage of its life-cycle. Sales growth of a product is likely to be low at the introductory stage due to several reasons. First, it may take time to make the product available in different markets.

What happens during the maturity stage of a product life cycle?

During the maturity stage of the product life cycle, the sharp growth in sales begins to slow, and profits at the beginning of this stage decline.

What is the product life cycle?

A product life cycle (PLC) is the course that a product’s sales and profits take over its lifetime. A product life cycle normally looks like a bell-shaped curve showing four stages at different points of the curve. The four stages of the product life cycle are; Introduction. Growth.

Why do companies use slow penetration?

If the company senses that the size of the market is substantially large, buyers are mostly aware of the product and price-sensitive, and competition is existent , it may decide to pursue the slow-penetration strategy. It will help the company capture a significant portion of the market, taking advantage of its high price and low promotion costs.

How does a marketing executive expand a product line?

To compete in this type of market environment effectively, the marketing executive will expand the product line by making a variety of models and styles to broaden the product’s appeal, producing something for everybody in hopes of sustaining sales.

What is the introduction stage?

The introduction stage shows low sales numbers as the product is being introduced in the market. Profit is zero or negative in this stage because of the heavy expenses of product introduction. With proper marketing, a product can go into the growth stage.

Why do brand life cycles shorten?

As competition increases, brand life-cycles tend to shorten, requiring the introduction of new marketing strategies designed either to increase sales or to kill off one brand to make way for a new one. Forecasting product life-cycles, and when a product is about to move into a new stage, is no easy matter.

What is the product life cycle?

The Product Life Cycle (PLC) defines the stages that a product moves through in the marketplace. Oligopolistic Market The primary idea behind an oligopolistic market (an oligopoly) is that a few companies rule over many in a particular market or industry, as it enters, becomes established, and exits the marketplace.

What is the introduction stage of a product?

1. Introduction Stage. When a product first launches, sales will typically be low and grow slowly. In this stage, company profit is small (if any) as the product is new and untested. The introduction stage requires significant marketing efforts, as customers may be unwilling or unlikely to test the product.

What happens to the market after a shakeout?

Eventually, the market grows to capacity, and sales growth of the product declines. In this stage, price undercutting and increased promotional efforts are common as companies try to capture customers from competitors. Due to fierce competition, weaker competitors will eventually exit the marketplace – the shake-out. The strongest players in the market remain to saturate and dominate the stable market.

What is a slow reducing distribution channel?

Slowly reducing distribution channels and pulling the product from underperforming geographic areas. Such a strategy allows the company to pull the product out and attempt to introduce a replacement product.

What is selling a product to a niche operator?

Selling the product to a niche operator or subcontractor. This allows the company to dispose of a low-profit product while retaining loyal customers.

What is the goal of the introduction stage?

The underlying goal in the introduction stage is to gain widespread product recognition and stimulate trials of the product by consumers. Marketing efforts should be focused on the customer base of innovators – those most likely to buy a new product.

How are economies of scale realized?

Economies of scale are realized as sales revenues increase faster than costs and production reaches capacity. Competition in the growth stage is often fierce, as competitors introduce similar products. In the growth stage, the market grows, competition intensifies, sales rise, and the number of customers increases.