During what phase of a typical customer product lifecycle is the product widely accepted but intense price competition reduces profits and some firms drop out due to increased market competition?


Question: During what phase of a typical customer product lifecycle is the product widely accepted but intense price competition reduces profits and some firms drop out due to increased market competition?

The phase of a typical customer product lifecycle in which the product is widely accepted but intense price competition reduces profits and some firms drop out due to increased market competition is the maturity phase.

During the maturity phase, the product has already been introduced to the market and has been accepted by consumers. Sales have reached their peak and are now starting to decline. There is a lot of competition in the market, and firms are trying to reduce their costs in order to maintain profits. This can lead to price wars, which can reduce profits for all firms involved. Some firms may even drop out of the market altogether if they cannot compete with the larger, more established firms.

The maturity phase is the longest phase of the product lifecycle. It can last for many years, or even decades. Some products, such as milk and bread, have been in the maturity phase for centuries.

Here are some examples of how intense price competition can affect firms in the maturity phase of the product lifecycle:

  • A firm may have to lower its prices in order to compete with other firms. This can reduce profits.
  • A firm may have to spend more money on advertising and marketing in order to maintain its market share. This can also reduce profits.
  • A firm may have to cut costs in other areas, such as research and development, in order to maintain profits. This can reduce the firm's ability to innovate and develop new products.

The intensity of price competition in the maturity phase of the product lifecycle depends on a number of factors, including the level of product differentiation, the number of competitors in the market, and the barriers to entry. In general, however, price competition is more intense in the maturity phase than in any other phase of the product lifecycle.

This is why it is important for firms to develop a strong brand identity and to differentiate their products from those of their competitors. This can help firms to maintain their market share and to reduce the impact of price competition.

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