DECADECA Travel and Tourism Practice Exam

What term is used to describe the period when sales fall off quickly and profits drop?

1. Market Saturation

2. Decline

3. Innovation

4. Recession

The correct answer is: Decline

The term that accurately describes the period when sales fall off quickly and profits drop is "Decline." In the context of the product life cycle, the decline stage represents the phase following maturity, where the market becomes saturated, consumer preferences may shift, competition increases, and new innovations emerge. As a result, there is a significant decrease in demand for the product or service, leading to dwindling sales and profits for businesses involved. During this stage, companies often face heightened challenges as they must decide whether to revamp their product, reduce prices, or even phase out the offering altogether. The decline can occur due to various factors such as technological advancements that render the product obsolete or changes in consumer behavior that shift away from the product in question. This makes "Decline" the most fitting term to describe this critical phase in the sales and profitability trajectory.