Which of the following statements about the stages of the product life cycle is FALSE?

Question

BlackTom AI · Accepted Answer

When evaluating statements about the product life cycle stages, it helps to map each claim to the typical patterns seen in introduction, growth, maturity, and decline.
Option 1: 'The market introduction stage can be seen as investing in the future.' This is a common characterization. In introduction, firms often incur losses or low profits because they are investing in product development, market education, and distribution, with the expectant payoff in later stages. Framing it as investing in the future aligns with standard PLC description.
Option 2: 'In the market growth stage, profits keep rising steadily with no sign of decline.' This is where the potential issue lies. While profits commonly rise during growth due to increasing sales and economies of scale, it is not universally guaranteed that profits rise without any peak or risk of decline. Competitive responses, price pressure, rising costs, or market saturation can cause profits to stall or begin to fall before reaching maturity. Therefore, describing profits as rising with no decline is an overgeneralization and is not consistently true across products and industries.
Option 3: 'Sales level off and profits go down in the market maturity stage.' In maturity, sales growth typically slows or levels off as the market becomes saturated, and profits often decline due to competitive price pressure and rising costs. This captures a well-established pattern and is a reasonable description of the maturity stage.
Option 4: 'The sales decline stage can be seen as a time of replacement.' In the decline stage, demand for the existing product typically drops as newer alternatives emerge, leading firms to replace or discontinue the product. This statement accurately reflects the lifecycle transition.
Option 5: 'Industry profits go down throughout the market maturity stage.' This expresses a general trend observed in many industries, where competitive intensity and price erosion reduce profitability over time during maturity. While not every firm experiences a uniform decline, the overall industry profitability tends to trend downward in maturity, making this a plausible, commonly cited characteristic.

In summary, option 2 is the statement that diverges most clearly from the typical, widely taught characterization of the growth stage, where profits are not guaranteed to rise without any eventual decline or plateau. The other options describe aspects that align with conventional PLC understanding, with nuances noted where appropriate.

BUSI406 [Kubowicz Malhotra]: Principles of Marketing Final

Which of the following statements about the stages of the product life cycle is FALSE?

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