Association of Chartered Certified Accountants (ACCA) Certification Practice Test

During which phase does increased competition typically arise?

1. The product growth phase

2. The product maturity phase

3. The product decline phase

4. The core product phase

The correct answer is: The product maturity phase

Increased competition typically emerges during the product maturity phase due to several key factors associated with market dynamics. At this stage, the product has already gained widespread acceptance among consumers, leading to heightened rivalry among existing competitors who are vying to maintain or increase their market share. During the maturity phase, demand for the product stabilizes, and market saturation occurs, prompting companies to differentiate their offerings through marketing strategies, improved features, and pricing adjustments. This often leads to aggressive competition as businesses look to attract customers from their rivals, aiming to capture a larger slice of the shrinking growth potential in a saturated market. Additionally, new entrants may be drawn to the market, enticed by the established demand for the product. This further intensifies the competition as companies innovate and attempt to stand out in a crowded field. The emphasis on capturing customer loyalty and the need to combat market share loss makes the maturity phase a critical period for competitive strategies.