How does understanding product life cycles assist in merchandising?

Understanding product life cycles is crucial for effective merchandising because it provides insights into the various stages a product goes through, from introduction to decline. By recognizing these stages, retailers can make informed decisions about when to promote, discount, or phase out products. For instance, during the introduction stage, a product may require marketing support to raise awareness, while in the growth phase, the focus might shift to maximizing sales and optimizing inventory levels. As a product reaches maturity, pricing strategies may need adjustment to maintain competitiveness, and once sales start to decline, retailers need to decide when to discount items to clear inventory or phase them out completely.

This knowledge enables retailers to align their merchandising strategies with the product's lifecycle, ensuring inventory decisions, promotional efforts, and pricing strategies are timely and effective. Therefore, leveraging product life cycles allows for a proactive approach in managing a product's presence in the market, ultimately improving sales performance and customer satisfaction.