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Question
Explain the second stage of product life cycle.
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Solution
Growth Stage: In this stage, demand and sales increase rapidly, distribution expands, competition increases, and prices fall. The promotional focus switches from “buy my product” to “buy my brand”. The company grows sales by expanding market share in existing areas and entering new markets. Promotional expenses remain high but decrease as a percentage of sales turnover. As a result, profits increase. In some circumstances, significant product improvements may occur.
The following strategies may be adopted during the growth stage:
- Heavy advertising to create brand image and to stimulate sales.
- Expanding distribution channels to make the product available wherever it is demanded.
- Introducing new versions of the product to cater to the needs of different types of customers.
- Keeping the price at competitive levels.
- Greater emphasis on customer service.
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