At a senior management meeting of Battery Ltd, one of the managers made the following four statements in relation to ‘product life cycle and some aspects of this life cycle’. The manager also made a statement about a new product in Battery’s portfolio of products. Evaluate the four statements and identify those that are correct:
I “Introduction: Development, marketing and production are costs high. Sales volumes are low. To overcome these problems, it is important to establish a temporary monopoly so as to allow a ‘penetration pricing’ strategy.”
II “Growth: Sales volumes accelerate, and profits accelerate at the same rate as sales growth. New competitors may enter the market. If entry to the market is expensive (for competitors), the growth stage can see a strengthening of an organisation’s competitive position.”
III “Maturity: Cash cows can be considered as mature products that hold a high-market share in a low-growth market. Due to the low market growth, we now need to continue investing in those products. The positive cash flows produced help to support the necessary development of our future portfolio of products.”
IV “Our newly introduced product has accelerating sales volume, but it is in in a low growth market. That means the product is a currently a ‘question mark’ in our portfolio of products and we hope it will not soon enter the ‘decline’ stage of its product life cycle.”
A. I, II
B. I, IV
C. II, III
D. III, IV
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