As competitors enter, monopolistic competition develops leading to down-sloping demand curves. During this stage, competitor analysis is especially useful to the marketing manager as an aid to appropriate strategy planning. Too much focus on current profits while ignoring long term competitive trends is a common mistake. In this stage, sales level off and competition continues to increase. Promotion costs increase and price competition in some segments cuts into profits.
Some firms drop out of the market.
Persuasive promotion becomes more important. During the sales decline stage, new products replace older ones. Price competition is common and sales are primarily to the most loyal customers or to those who have waited the longest to enter the market.