Question

Discuss any two important characteristics of product life cycle when the product is introduced in the market.

Answer 1

1. High costs and low sales volume: Prices are often high at this stage due to the small scale of production and heavy promotional expenditures. Sales are growing at a slow rate due to a lack of customer awareness and limited distribution. As a result, earnings are generally negative.
2. Limited competition and risky stage: Competition is essentially non-existent because the product is new and imitation has yet to take hold. However, this stage is extremely risky because a large proportion of new products fail at this time due to consumer reluctance and hefty expenses.