Price Firmness and the Support life Cycle

 Essay on Price Flexibility and the Support life Cycle

Many key factors be an important factor in the prices decisions taken by managers. One of those factors which can help decide the pricing insurance plan of a product is the price elasticities and how they will vary in the product's lifestyle cycle. The PLC may be divided into a lot of stages seen as the revenue generated by the product. While the product advances in its existence cycle, changes in pricing are usually required in each stage, in order to adjust to the growing challenges and opportunities. -During the launch stage, the main goal is usually to establish a marketplace and build an initial demand for the product set. Prices are usually large, assuming a skimming costs strategy for a high profit perimeter as the first adopters choose the product and the firm looks for to recover development costs quickly. This can be the case of high-technology products like VCRs, microwaves, cellphones. Here, the price elasticity with the demand is less than 1 . The consumers are willing to pay high price to get the product having a prestige benefit. In this case, the necessity is inelastic, but rates may show up considerably throughout the next stages. In some cases, an industry penetration pricing strategy can be used and initial prices happen to be set low to gain business rapidly. Right here, demand is highly elastic. Item differentiation raises with time as a brand image is created and prices are generally raised since the demand become less elastic. -The expansion stage is actually a period of rapid revenue progress. Sales boost as even more customers obtain familiar with the products and additional marketplace segments are targeted. In the event that demand for the product is increasing, more stores will sell the merchandise. Often , during the later portion of the growth level, a price competition or increased promotional costs may occur to affect customers' preferences and increase sales. The price could possibly be maintained for a high level or perhaps reduced for capturing additional clients. Here, the necessity is needs to become elastic. A price reduction could lead to...

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