Which stage of the product life cycle is typically characterized by market saturation and intense price competition?

• A. Growth
• B. Shakeout
• C. Maturity
• D. Introduction

Answer: (B)

As a product moves toward the later part of its life cycle, growth slows and the market becomes crowded. Demand is near saturation, and firms must compete aggressively on price to win or defend share. This intense price competition, combined with a shrinking pool of new customers, leads weaker players to exit the market, leaving a smaller, more efficient set of competitors. That process of consolidation and price-driven rivalry is what the shakeout stage describes most clearly, making it the best fit for a market saturated at this point and characterized by aggressive pricing. (Maturity also features saturation and price pressure, but the shakeout emphasizes the ongoing exits and consolidation that follow.)