How Does Product Life Cycle Affect Pricing Decisions - BikeHike (2023)


During the growth stage of the life cycle of a product, there is high demand for the product and a lot of sales. You might need to work on getting your customers to choose your product over the competition. This could require more marketing and lowering your prices. You might try to market to new customers.

What is pricing over product life cycle?

The product life cycle pricing is a tool for the marketers, designers and management alike that promises overall success of a product in a market. Businesses can derive the most value out of a product/service with the help of smart pricing strategies.

How a product life cycle is used in decision making process?

The life cycle of a product is broken into four stages—introduction, growth, maturity, and decline. This concept is used by management and by marketing professionals as a factor in deciding when it is appropriate to increase advertising, reduce prices, expand to new markets, or redesign packaging.

What is the impact of product life cycles on marketing decisions?

It gains more and more customers as it grows and, eventually, the market stabilizes and the product becomes mature. Then after a period of time, the product is overtaken by development and the introduction of superior competitors, goes into decline, and is eventually withdrawn. At each stage, marketing strategy varies.

How does pricing affect product?

Effects of Low Pricing Low pricing can affect the volume of sales — up or down. Some retailers deliberately price certain products low to get the attention of consumers to whom they hope to sell other more expensive products. But consumers sometimes fear the quality of a product is poor if the price too low.

What is the relationship between product life cycle and pricing?

Pricing has a big impact on this third stage of the product life cycle, as it did back at the introduction of the product to market. In the first stage, an incorrect price could keep consumers from buying it in the first place. Then in the maturity stage, as more competitors enter the market, their loyalty is tested.

Why is product life cycle important in marketing?

The product life-cycle is an important tool for marketers, management and designers alike. It specifies four individual stages of a product’s life and offers guidance for developing strategies to make the best use of those stages and promote the overall success of the product in the marketplace.

What are the benefits of product life cycle costing?

The following are the benefits of product life cycle costing: (i) It results in earlier actions to generate revenue or to lower costs than otherwise might be considered. (ii) It ensures better decision from a more accurate and realistic assessment of revenues and costs, at-least within a particular life cycle stage.

Why is the product life cycle an important consideration in selecting and developing a marketing strategy?

Why is the product life cycle an important consideration in selecting and developing a marketing strategy? Marketing strategies can be developed with the product life cycle in mind, so marketers can plan ahead for changes that may need to happen as their product moves through the cycle.

At what stage of the product life cycle do sales peak at what stage does profit peak at what stage does competition peak?

After a product reaches the marketplace, it enters the product life cycle. This cycle typically has four stages: introduction, growth, maturity, and decline (and possibly death). Profit margins are usually small in the introductory phase, reach a peak at the end of the growth phase, and then decline.

What happens to sales in the maturity stage of the product life cycle?

Maturity Stage: The maturity stage of the product life cycle shows that sales will eventually peak and then slow down. During this stage, sales growth has started to slow down, and the product has already reached widespread acceptance in the market, in relative terms. Ultimately, during this stage, sales will peak.

What is the importance of product pricing?

Pricing and the Marketing Mix: Pricing might not be as glamorous as promotion, but it is the most important decision a marketer can make. Price is important to marketers because it represents marketers’ assessment of the value customers see in the product or service and are willing to pay for a product or service.

Why price commence at product development stage?

The initial stage of a product’s life cycle, development, is when the product is first introduced to the market. Typically, sales are slow during this stage because consumers are unfamiliar with the new product. Pricing products low (market penetration) helps a business penetrate the market and gain consumer attention.

What are the factors affecting pricing decisions?

9 Factors Influencing Pricing Decisions of a Company Price-quality relationship: Product line pricing: Explicability: Competition: Negotiating margins: Effect on distributors and retailers: Political factors: Earning very high profits:.

How does price affect a seller’s decision to produce a product?

How does price affect a seller’s decision to produce a product? If the price consumers are willing to pay for a product is high, producers will produce more of that product. When supply of a product increases, the price decreases. When supply of a product decreases, the price increases.

How do costs affect selling price?

Costs (direct or indirect) are the expenses that a business incurs in bringing a product or service to market. The selling price is the amount a customer pays for that product or service. The difference between the price that is paid and the cost that is incurred is the profit the business makes when the item sells.

What is product life cycle How do marketing strategies change as product moves through various stages of life cycle?

The product life cycle contains four distinct stages: introduction, growth, maturity and decline. Each stage is associated with changes in the product’s marketing position. You can use various marketing strategies in each stage to try to prolong the life cycle of your products.

What pricing method is used to determine the price of the product?

Cost based pricing is the easiest way to calculate what a product should be priced at. This appears in two forms: full cost pricing and direct-cost pricing. Full cost pricing takes into consideration both variable, fixed costs and a % markup. Direct-cost pricing is variable costs plus a % markup.

At what stage of product life cycle can a higher price usually be charged?

Penetration pricing – starting with a low introductory price to attract and keep the market share. Start low increase later. Price skimming – keeping the price high initially if the product is unique and the company can charge a high price for it.

Why do marketers need to know about the product life cycle strategies?

As sales and profits decline, some competitors will withdraw from the market. Also for the decline stage, careful selection of product life cycle strategies is required. The reason is that carrying a weak product can be very costly to the firm, not just in profit terms. There are also many hidden costs.

What is the role of the product life cycle in the international market?

The international product lifecycle (IPL) is an abstract model briefing how a company evolves over time and across national borders. This theory shows the development of a company’s marketing program on both domestic and foreign platforms.

Does life cycle costing ensure profit?

Life cycle costing will calculate the costs and revenue per product lifes cycle, so the top management can make a precise decision to ensure company long-term profit. The cost will include everything from research and development (R&D), production cost, and cost of discontinuing production.

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