Describe the profitability levels at different stages of a product's life cycle. - Scottish Highers Business Management - Question (d) - 2023
Question (d)
Describe the profitability levels at different stages of a product's life cycle.
Worked Solution & Example Answer:Describe the profitability levels at different stages of a product's life cycle. - Scottish Highers Business Management - Question (d) - 2023
Step 1
Development
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Answer
During the development stage, no profit is made as investment is focused on research and development.
Step 2
Introduction/Launch
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At the introduction stage, profits are typically very low or none at all due to initial marketing and promotional costs.
Step 3
Growth
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In the growth stage, profits should start to steadily increase as sales volume rises and the product gains market acceptance.
Step 4
Maturity
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During the maturity stage, profit is at its highest point as the product is well-established in the market.
Step 5
Saturation
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In the saturation stage, profits begin to decline as competition increases and market saturation occurs.
Step 6
Decline
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In the decline stage, profits continue to fall rapidly as consumer interest wanes and sales decrease.
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