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Question
Explain the maturity stage of the product life cycle.
Solution
- During this stage, sales continue to grow but at a decreasing rate. Competition increases further and markets get stabilised. The product is known all over the market and a third level market (low income group) may emerge.
- Due to competition prices are reduced but promotional expenditure remains high. As a result profits decline and marginal producers are forced to go out of the market. Manufacturers broaden their lines and new models of the product are introduced.
- Supply exceeds demand for the first time. After some time there is saturation in the market. There is no possibility of increase in sales and the sales curve is levelling off.
- For products with long-run demand, maturity stage may last for a long period. But sooner or later product demand starts declining as new products are introduced in the market. Thus, this stage is characterised by product differentiation, product improvement and identification of new market segments.
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