Study the product life cycle diagram as given. If A, B, C and D represent different stages of product life cycle, which stage is least expensive?
Show Hint
Think of the cost progression in the Product Life Cycle:
- Introduction (Very High Cost) \( \rightarrow \) Growth (High Cost) \( \rightarrow \) Maturity (Moderate Cost) \( \rightarrow \) Decline (Lowest Cost due to minimal marketing).
Step 1: Understanding the Concept:
The Product Life Cycle (PLC) is a marketing concept that tracks the sales and profit history of a product over time.
The cycle is divided into four distinct stages: Introduction, Growth, Maturity, and Decline.
Each stage requires different levels of investment and marketing support. Step 2: Detailed Explanation:
Let us analyze the four stages shown in the diagram: - Stage A (Introduction):
The product is launched in the market.
This stage is expensive because of high costs associated with research, development, and marketing campaigns to build consumer awareness. - Stage B (Growth):
Sales grow rapidly as the product gains market acceptance.
Marketing costs remain high to build brand preference and counter new competitors. - Stage C (Maturity):
Sales peak and begin to level off.
The company must invest in promotional activities and product modifications to defend its market share against competitors. - Stage D (Decline):
Sales and profits fall as the product is phased out, often due to changing consumer preferences or newer technologies.
During this stage, the company minimizes expenses by stopping all research and development, reducing promotional activities, and harvesting remaining profits before withdrawing the product.
This cost-cutting makes the Decline stage the least expensive stage for the company to manage. Step 3: Final Answer:
Stage D (Decline) is the least expensive stage of the Product Life Cycle.
Thus, the correct choice is (D).
