Which phase is characterized by a decline in profits and heightened costs due to competition?

The correct answer is characterized as the Shake-Out Phase because this stage typically occurs after a period of growth when the market becomes saturated. During the Shake-Out Phase, companies face increased competition, leading to a decline in profits as they struggle to maintain market share. Additionally, companies may raise prices and invest in marketing or operational improvements to stay competitive, which can also contribute to rising costs. This phase often results in the exit of weaker competitors, allowing the remaining companies to stabilize their profitability in the market.

The other choices represent different stages of a product’s lifecycle. The Launch Phase involves introducing a product to the market, which usually incurs high initial costs but not necessarily high competition. The Growth Phase features increasing sales and typically enhanced profitability as the market expands. The Decline Phase sees sales and demand shrinking, but the intense competition and rising costs are more prominent during the Shake-Out Phase, where various players are struggling to adapt to the market conditions.