Competitive Shakeout generally occurs between which of the following two stages in the Product Life Cycle (PLC)?
The Product Life Cycle (PLC) is a framework used by marketers to understand the typical stages that a product or service goes through from its introduction to its decline. The four stages of the PLC are: introduction, growth, maturity, and decline. Each stage is characterized by different levels of sales, profits, and competition, and each stage requires different marketing strategies to be successful. One phenomenon that often occurs during the PLC is the competitive shakeout, which typically occurs between the growth and maturity stages.
The growth stage is the second stage in the PLC and is characterized by rapid increases in sales and profits. During this stage, the product or service gains acceptance among consumers, and competitors begin to enter the market to capture a share of the growing demand. As competition intensifies, weaker competitors may struggle to survive and eventually exit the market, resulting in a competitive shakeout. This process can help to consolidate the market, with the remaining competitors gaining a larger market share and potentially increasing their pricing power.
Competitive shakeouts can have a significant impact on the market and the companies involved. During a shakeout, weaker competitors may be forced to exit the market, which can lead to a loss of jobs, reduced innovation, and reduced competition. However, the surviving companies may benefit from increased market share and reduced competition, which can lead to increased pricing power and profitability.
There are several factors that can contribute to a competitive shakeout. One factor is the intensity of competition in the market. If there are many competitors in the market, each competing aggressively on price and other factors, weaker competitors may struggle to survive. Another factor is the level of differentiation among the products or services in the market. If the products or services are highly similar, it may be difficult for weaker competitors to differentiate themselves and gain market share.
Another factor that can contribute to a competitive shakeout is the level of investment required to compete in the market. If the market requires a significant investment in research and development, marketing, or distribution, weaker competitors may struggle to keep up with the larger, more established players in the market. This can lead to a consolidation of the market, with the stronger players acquiring or absorbing the weaker players.
Competitive shakeouts can be beneficial for the companies that survive, as they can result in increased market share and profitability. However, they can also be challenging for the companies involved, particularly for those that are forced to exit the market. As a result, it is important for companies to carefully consider the level of competition, differentiation, and investment required before entering a market, and to develop a strong marketing strategy that can help them survive and thrive through the PLC. This may include investing in research and development, developing strong brand differentiation, building strong distribution channels, and pricing products or services appropriately to maintain profitability.
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