Increasing Competition and Promotional Expenditures

When would promotional expenditures most likely increase in response to increasing competition?

At which stage of the product life cycle would a company be expected to increase promotional spending to address growing competition?

A) growth

B) decline

C) maturity

D) product development

E) adoption

Answer:

Promotional spending would most likely increase throughout the expansion stage of the product cycle as a firm tries to respond to growing competition.

During the expansion stage of a product's life cycle, a company often faces increasing competition as more players enter the market. In order to stay competitive and maintain or grow their market share, companies need to invest more in promotional activities to attract customers and stand out from their competitors.

Marketing efforts such as advertising, sales promotions, and public relations become crucial during this stage to create awareness about the company's products or services and convince customers to choose them over alternatives. Increased promotional expenditures allow companies to reach a larger audience, communicate their value proposition effectively, and influence consumer purchasing decisions.

Therefore, it is essential for companies to strategically allocate resources towards promotional activities during the growth phase to capitalize on the expanding market opportunities and stay ahead of the competition.