Which stage of the product life cycle would have the lowest industry profits, where a firm entering may experience profit losses?
A. Market introduction
B. Market growth
C. Market maturity
D. Sales decline
E. Sales and profits decline, then rise
Answer: (A) During the market introduction phase, a new idea is being brought to the market. Consumers are not looking for the product, so firms must invest heavily in promotion to begin to secure sales for their products. (B) is incorrect. During growth, profits for the industry actually are rising, and then peak. Maturity (C) is also incorrect. Although the profits decrease during this stage, they are not at their lowest. (D) is also incorrect. In the sales decline stage, profits will eventually become zero; but this is not the lowest of the four stages. In introduction, there may be negative profits. (E) is not one of the four stages of the product life cycle and is incorrect.