What options are available to a firm that has a product in the decline stage of the product life cycle? Briefly discuss each option
What will be an ideal response?
A firm has many options with regard to a failing product. It may decide to maintain its brand, repositioning or reinvigorating it in hopes of moving it back into the growth stage of the product life cycle. Management may decide to harvest the product, which means reducing various costs (plant and equipment, maintenance, R&D, advertising, sales force), hoping that sales hold up. If successful, harvesting will increase the company's profits in the short run. Finally, management may decide to drop the product from its line. The company can sell the product to another firm or simply liquidate it at salvage value. If the company plans to find a buyer, it will not want to run down the product through harvesting.
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When a country trades goods and services for other goods and services it is called _____.
Fill in the blank(s) with the appropriate word(s).
Which of the following is true of price elasticity of demand?
A. The price elasticity of demand is only defined by the competitive conditions in a country. B. Demand is said to be inelastic when a large change in price produces a large change in demand. C. Demand is said to be elastic when a large change in price produces a small change in demand. D. Price elasticity tends to be greater in countries with low income levels. E. The elasticity of demand is inversely proportional to the number of competitors offering a particular product.