It is said that “As products mature, both location of sales and optimal production changes”. Justify...

It is said that “As products mature, both location of sales and optimal production changes”. Justify
the statement in the light of product life cycle theory.

Solutions

Expert Solution

As per the product life cycle theory,products undergo the 3rd stage known aa Maturity stage.In this stage consumers are well known about the product and also own it.In this stage the volume of sales increase at a gradual rate.Hence location varies.At this stage, company faces many competitors and hence original price reduces in order to pillar the share market and also back up sales.there is also a fall in profit margin. then the producer will tend for further more available markets.With this phenomena the flow of trade and the direction of trade is affected.This leads to change in location of both sales and optimal production changes.As the product reach its maturity stage,after local market demand is fulfilled, producer haunt for external potential markets,which have knowledge and demand both for the product.Hence the producer will then have its production for the external markets as well.sales extends from one place to another,and according production also.

Rahul Sunny answered 1 year ago

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