Explain the effects of the various stages of the product life cycle on product/service profitability.

What will be an ideal response?


In the introductory stage of the product life cycle (PLC), costs are high (especially marketing costs) and sales are low, so the product is generating a loss. During the growth stage, costs are decreasing (due to economies of scale and lower marketing costs) and revenues are rising quickly as more consumers purchase more of the product and competitors have not yet entered the market. The maturity stage is characterized by leveling profits as competitors enter the market, sales level off, and marketing costs increase to ward off competitors. In the decline stage, sales start to decrease, new products create additional competition, and consumers get tired of the present product.

Business

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Business