Which product life cycle stage involves increased competition leading to potential market shakeout?

The stage of the product life cycle characterized by increased competition leading to potential market shakeout is the growth stage. During this phase, a product has gained market acceptance, and sales begin to rise significantly. As more competitors recognize this potential, they enter the market, thereby intensifying competition.

This influx of competitors can lead to a variety of outcomes. Some companies might struggle to differentiate their offerings or maintain their market share, which can result in market shakeouts, where weaker competitors are forced out of the market. This is particularly common as companies innovate and seek to capture consumer attention, sometimes leading to price wars or increased advertising expenditures to secure market presence.

In contrast, the introduction stage is where a product is launched and initial consumer awareness is built, but competition is typically limited. The maturity stage follows growth and is marked by market saturation; here, much of the competition has already taken shape, but the foundational competitive dynamics differ from those experienced in the growth phase. Finally, the decline stage indicates a reduction in sales and a shrinking market, where competition may be less relevant as overall demand decreases. Thus, the growth stage is distinct and critical for understanding competitive dynamics in early product adoption and market penetration.