Why is it important for firms to know what stage of the product life cycle a product is in?

• A. It allows firms to avoid competition entirely.
• B. It eliminates the need for market research.
• C. It helps firms develop appropriate marketing, pricing, and production strategies for each stage.
• D. It guarantees that the product will always be profitable.

Answer: (C)

Verified step by step guidance

1. Understand the concept of the product life cycle, which consists of stages such as introduction, growth, maturity, and decline, each with distinct characteristics affecting sales, costs, and competition.
2. Recognize that firms need to adapt their marketing, pricing, and production strategies according to the current stage of the product life cycle to maximize profitability and market share.
3. Analyze how in the introduction stage, firms might focus on building awareness and investing in promotion, while in the maturity stage, the focus might shift to differentiating the product and managing costs.
4. Note that knowing the product life cycle stage helps firms anticipate changes in demand and competition, allowing them to make informed decisions rather than assuming constant conditions.
5. Conclude that this knowledge does not guarantee profitability or eliminate competition but equips firms with the tools to respond effectively to market dynamics.