Question

It's What's Hip, a chain of 18 music and CD stores, has discovered that carrying a weak product during the decline stage of the PLC can be very costly to a firm, and not just in profit terms. Which one of these is NOT likely to be one of those costs?

A) takes up much of management's time
B) frequent price and inventory adjustment
C) requires advertising and sales force attention
D) few concerns about company image and other products
E) all of the above

Answer 1

Advertising and sales force attention is, in fact, a likely cost associated with carrying a weak product during its decline in the PLC. Other costs include inventory management, loss of opportunity, and potential loss of customer loyalty. Carrying unprofitable products can lead to business exit in the long run.

Step-by-step explanation:

Certain costs associated with carrying a weak product during the decline stage of the product life cycle (PLC) may burden a firm. One of these costs is requiring advertising and sales force attention, which involves spending resources on promotions for a product that may no longer be profitable. However, this option (requires advertising and sales force attention) listed in the question is a likely cost, so it would not be correct to choose it as an answer to 'Which one of these is NOT likely to be one of those costs?'

In addition to advertising and sales force attention, businesses must also be aware of other direct and indirect costs. These include inventory management, potential loss of opportunity for investing in more profitable ventures, and the negative impact on brand image which can lead to loss of customer loyalty. Carrying a weak product can thus lead to reduced profits and may eventually prompt a business to exit the market, especially in the face of strong competition from firms offering better or cheaper products.