An industry's sales have leveled off and profits are declining in oligopolistic competition. Consumers see competing products as "homogeneous." Several firms have dropped out of the industry, but a new one entered recently. Firms in the industry are trying to avoid price-cutting by spending on persuasive advertising. These firms are competing in which stage of the product life cycle?
A) Market growth
B) Market maturity
C) Market development
D) Market introduction
E) Sales decline

Question

Quizplus · Accepted Answer

The levelling off of sales and declining profits indicate that the industry is in the market maturity stage. The entry of a new firm and the drop out of several firms suggest that the industry is experiencing intense competition. The homogeneity of competing products further adds to the competition. The firms are avoiding price-cutting by investing in persuasive advertising, which is a common practice in the mature stage.

An Industry's Sales Have Leveled Off and Profits Are Declining