Why do profits increase during the growth stage of the product life cycle?
A) Distribution intensity is increasing.
B) Competitors have arrived and revenues are under pressure.
C) Competition has not yet taken away company sales.
D) Prices charged increase during the growth stage.

Question

Quizplus · Accepted Answer

During the growth stage, the product is gaining wider acceptance and sales are increasing rapidly. However, competition has not yet peaked, and the company can enjoy relatively high profit margins due to low competitive pressure. As the market becomes more saturated, profits will decrease, and competition will intensify.

Answer: D 
 Another reason profits may increase during the growth stage is that prices charged for the product may rise as demand increases. However, this is not always the case and may depend on the specific industry and competitors.

Why Do Profits Increase During the Growth Stage of the Product