A company has been promoting a relatively young product, which is beginning to show significant increase in market share. During the growth stage of the product life cycle, what is one common choice about how to use profits from the product sales

Distribute the profit to investors who expect returns.

Pocket the profits for the company.

Conduct research into future product development.

Reinvest the profits in order to pursue further market share.

Question

Business

Lennon Liu

14 October, 00:16

A company has been promoting a relatively young product, which is beginning to show significant increase in market share. During the growth stage of the product life cycle, what is one common choice about how to use profits from the product sales

Distribute the profit to investors who expect returns.

Pocket the profits for the company.

Conduct research into future product development.

Reinvest the profits in order to pursue further market share.

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Answers (1)

Know the Answer?

Elian Burke · Answer 1

The correct thing to do here would be to:

Reinvest the profits in order to pursue further market share.

Explanation:

This is one common choice that is usually taken in these sort of decisions although none of the other options are inherently bad in themselves.

All the options given here can be used on the right product as the situations are different.

This is universally advisable however as the in flow of the first profits must be used to expand the market share while the product is growing so as to ride the wave of that growth and not to make it stagnant.

It is much more difficult to start another wave if the demand dwindles.