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Question 425 - CSCP discussion

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Total annual profit typically is highest at what stage of the product life cycle?

A.
Growth
Answers
A.
Growth
B.
Maturity
Answers
B.
Maturity
C.
Decline
Answers
C.
Decline
D.
Introduction
Answers
D.
Introduction
Suggested answer: B

Explanation:

The product life cycle consists of four stages: Introduction, Growth, Maturity, and Decline. Total annual profit typically is highest at the maturity stage due to several factors:

Market Penetration: By the maturity stage, the product has achieved significant market penetration and established a stable customer base.

Economies of Scale: Production and operational efficiencies are maximized, reducing costs and increasing profit margins.

Stable Demand: Demand tends to stabilize during maturity, leading to consistent revenue streams.

Reduced Marketing Costs: Marketing expenses may decrease compared to the growth stage, as the product is already well-known.

In contrast, the introduction and growth stages involve higher costs for development and marketing, while the decline stage sees reduced sales and profitability.

Kotler, Philip, and Kevin Lane Keller. 'Marketing Management.' Pearson.

Anderson, Carl R., and Julian W. Vincze. 'Strategic Management: An Integrated Approach.' Cengage Learning.

asked 16/09/2024
Kevin Lizano
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