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Price Strategies Through the Life of a Product

Prices given to a particular product should vary during its lifecycle in relation to the market forces of demand and supply.

Introduction stage

This is the point where a product is new in the market. The industry has other existing companies giving the same product or even substitutes. The objective here is to attract purchasers and to make them prefer the particular product in relation to the substitutes. The best pricing strategy at this stage is the Suggested retail price. This is the price as compared to other companies in the industry or even as given by the Industry. This gives price ceilings or even price floors where the product is not overpriced or priced completely low in order to attract consumers from other companies. The other pricing strategy would be competitive pricing below competitors. At this point, the product is very new in the market and so competitors need to be dealt with. Their products have existed for some time so they command a big market share. The best way to attract customers is to make sure that the particular company’s goods are considerably affordable to them given the high cost of living.

Waters S. (2007). Guide to Retailing

Growth stage; At this point, a product has started selling and a considerable number of customers prefer the particular product as compared to those of the competitors. If you raise the price then, you will discourage consumers and if you lower the price you might be making losses, the objective of any business entity is to maximize profits at low cost. The best pricing strategy at this point would be Markup on cost. Some extra dollars are added to the cost of manufacture considering that transport, storage and marketing costs are still to be incurred. So the markup on cost should cater for this. The other pricing strategy would be Physiological pricing where the marketing division is able to read the expectations of purchasers and therefore give a price that will be desirable and move the product to the maturity stage.

Maturity stage

At this point the company has started acquiring some market share and may be just about to be a market leader in the industry. In order to cater for losses that occurred at the introduction stage due to excessive marketing of the product, multiple pricing may be considered. This is only possible if its products re the best in the market and the consumers have reason to buy them regardless of the price may be due to high quality. In order to cater for the transportation cost, storage cost and transaction expenses, Key stoning may be necessary. This requires doubling up of the cost of manufacture so that a desirable profit may be achieved.

Waters S. (2007). Guide to Retailing

Decline stage

This is where a product has started having stiff competition in the market and sales figures are going low. The company has lost its market leader position due to some factors. Consumers need to be motivated and ploughed back to the company’s products. Pricing strategy in this case need to entice so that sales figures may go up and make up for the losses that have already occurred. The pricing strategy in this case would be Discount pricing. The products are sold at a markup minus some discount and this is attractive to the customers from the product’s substitutes.


Waters S. (2007). Guide to Retailing @. Web.