The Product Life Cycle
In Introduction stage, most companies invest in advertising to make consumers aware of a product. If it faces only limited competition, it might use a skimming-pricing approach. Typically, because it will sell only a relatively small quantity of the product it will distribute to just a few channel. Because sales are low and advertising and other costs are high, the company tends to lose money during this stage.
In Growth stage, as the company focuses on building sales, which are increasing at this stage its advertising costs will go up. If competition appears, it may response by lowering prices and distributing through multiple distribution channels. With sales going up and costs going down, the product become more profitable.
In Maturity stage, if a product survives the growth stage, it will probably remain in the maturity stage for a long time. Sales still grow, though at a decreasing rate, and will eventually stabilize. Advertising will be used to differentiate the product from competition. Price wars may occur, but profits will be good because sales volume will remain high. As the product become outdated, the company may make changes in keeping with changing consumer preferences.
In Decline stage, demand has declined as more innovative product absorbs the attention from consumers. Price competition has become more intense, and profits are harder to come by; in fact, they have turned in to losses. The company will have to revitalize the product, but ultimately the company may have to give up and pull the product from the market
Mulberry’s product is in Growth stage as we can see from the company is trying to distributed product through multiple distribution channels. This will increase the sales and at the same time minimize the cost in the long run. Therefore the company will gain more profit in the long run.
If the product survives the growth stage it will probably remain in the maturity stage for a long...
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