Which stage of the PLC will promotional expenditures be high in an attempt to react to increasing competition?

In which of the following stages of product life cycle a company reduces sales promotion to take advantage of heavy consumer demand?

1. Introduction
2. Growth
3. Maturity
4. Decline

Answer (Detailed Solution Below)

Option 2 : Growth

Free

Teaching Aptitude Mock Test

10 Questions 20 Marks 12 Mins

Product Life Cycle:

1. The term product life cycle refers to the length of time a product is introduced to consumers into the market until it's removed from the shelves.
2. The life cycle of a product is broken into four stages—introduction, growth, maturity, and decline.
3. This concept is used by management and by marketing professionals as a factor in deciding when it is appropriate to increase advertising, reduce prices, expand to new markets, or redesign packaging.
4. The process of strategizing ways to continuously support and maintain a product is called product life cycle management.

1. 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. 
   • Sales Promotion Strategy: Use heavy sales promotion to entice trial.
2. Growth Stage:
   • 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.
   • The production runs become longer, and economies of scale are achieved, reducing per-unit cost, and also helping profits to increase rapidly. 
   • Sales Promotion Strategy: Reduce to take advantage of heavy consumer demand.
3. Maturity Stage:
   • 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.
   • At the beginning of the maturity stage, sales continue to grow but at a much slower rate.
   • Towards the end of this stage, sales and profits will start to fall fairly rapidly.
   • This stage is characterized by severe competition as many brands enter the market.
   • To combat competition, marketing costs increase substantially results in a reduction in profits. 
   • Sales Promotion Strategy: Increase to encourage brand switching.

For any product, it’s PLC will go to the decline stage, where the product’s sales and profits fall very quickly, and most competitors leave the market. Sales Promotion Strategy: Reduce to a minimal level.

Thus, option 2 is the correct answer.

Last updated on Nov 10, 2022

University Grants Commission (Minimum Standards and Procedures for Award of Ph.D. Degree) Regulations, 2022 notified. As, per the new regulations, candidates with a 4 years Undergraduate degree with a minimum CGPA of 7.5 can enroll for PhD admissions. The UGC NET Final Result for merged cycles of December 2021 and June 2022 was released on 5th November 2022.Along with the results UGC has also released the UGC NET Cut-Off.  With tis, the exam for the merged cycles of Dec 2021 and June 2022 have conclude. The notification for December 2022 is expected to be out soon. The UGC NET CBT exam consists of two papers - Paper I and Paper II. Paper I consists of 50 questions and Paper II consists of 100 questions. By qualifying this exam, candidates will be deemed eligible for JRF and Assistant Professor posts in Universities and Institutes across the country.

A company has to be good at both developing new products and managing them in the face of changing tastes, technologies, and competition. Products generally go through a life cycle with predictable sales and profits. Marketers use the product life cycle to follow this progression and identify strategies to influence it. The product life cycle (PLC) starts with the product’s development and introduction, then moves toward withdrawal or eventual demise. This progression is shown in the graph, below.

The five stages of the PLC are:

1. Product development
2. Market introduction
3. Growth
4. Maturity
5. Decline

The table below shows common characteristics of each stage.

Using the Product Life Cycle

The product life cycle can be a useful tool in planning for the life of the product, but it has a number of limitations.

Not all products follow a smooth and predictable growth path. Some products are tied to specific business cycles or have seasonal factors that impact growth. For example, enrollment in higher education tracks closely with economic trends. When there is an economic downturn, more people lose jobs and enroll in college to improve their job prospects. When the economy improves and more people are fully employed, college enrollments drop. This does not necessarily mean that education is in decline, only that it is in a down cycle.

Furthermore, evidence suggests that the PLC framework holds true for industry segments but not necessarily for individual brands or projects, which are likely to experience greater variability.[1]

Of course, changes in other elements of the marketing mix can also affect the performance of the product during its life cycle. Change in the competitive situation during each of these stages may have a much greater impact on the marketing approach than the PLC itself. An effective promotional program or a dramatic lowering of price may improve the sales picture in the decline period, at least temporarily. Usually the improvements brought about by non-product tactics are relatively short-lived, and basic alterations to product offerings provide longer benefits.

Whether one accepts the S-shaped curve as a valid sales pattern or as a pattern that holds only for some products (but not for others), the PLC concept can still be very useful. It offers a framework for dealing systematically with product marketing issues and activities. The marketer needs to be aware of the generalizations that apply to a given product as it moves through the various stages.

In which stage of the PLC will promotional expenditures be high in an attempt?

Which stage of the PLC will promotional expenditures be high in an attempt to respond to increasing competition?

Which stage of the product life cycle will advertising expenditures be especially high in an attempt to create consumer awareness?

In which stage of the product life cycle will promotional?