Why do manufacturers of products that are in the maturity stage of the product life cycle prefer to offer similar prices?
What will be an ideal response?
ANSWER: Maturity stage in a product's life cycle usually brings further price decreases as competition increases and inefficient, high-cost firms are eliminated. Distribution channels become a significant cost factor, however, because of the need to offer wide product lines for highly segmented markets, extensive service requirements, and the sheer number of dealers necessary to absorb high-volume production. The manufacturers that remain in the market toward the end of the maturity stage typically offer similar prices. At this stage, price increases are usually cost initiated, not demand initiated. Nor do price reductions in the late phase of maturity stimulate much demand. Because demand is limited and producers have similar cost structures, the remaining competitors will probably match price reductions.
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