Which of the following can be expected during the growth stage of the product life cycle (PLC) in a competitive market?

• A. Stable sales and no change in the number of firms
• B. Product obsolescence and market saturation
• C. Declining sales and exit of firms
• D. Rapid increase in sales and entry of new firms

Answer: (D)

Verified step by step guidance

1. Understand the concept of the Product Life Cycle (PLC), which typically includes four stages: introduction, growth, maturity, and decline. Each stage has distinct characteristics in terms of sales, competition, and firm behavior.
2. Identify the characteristics of the growth stage: this stage is marked by a rapid increase in sales as the product gains market acceptance and consumer awareness expands.
3. Recognize that during the growth stage, the market becomes more attractive to competitors, leading to the entry of new firms seeking to capitalize on the expanding demand.
4. Contrast the growth stage with other stages: stable sales and no change in firms are typical of the maturity stage; product obsolescence and market saturation occur in the decline stage; declining sales and exit of firms also happen during decline.
5. Conclude that the correct expectation during the growth stage in a competitive market is a rapid increase in sales accompanied by the entry of new firms.