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Pricing across product life cycle


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This power point presentation explores pricing across product life cycle in case of industrial products. The topic is related to Industrial Marketing

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Pricing across product life cycle

  1. 1. Pricing Across Product Life Cycle Introduction Stage Pricing Strategy There are two strategies available for a new product which is in the introductory stage of its life cycle . These are (I) Skimming ( High Initial Price ) strategy (II) Penetration (Low Initial Price ) strategy
  2. 2. • Skimming Strategy – This strategy is used for a distinctively new product which is to be purchased by a market that is not sensitive to the initial high price. An Industrial marketer thereafter reduces the price to reach other market segments that are more price sensitive. • Penetration Strategy- This strategy is effective when (i) price elasticity is high or buyers are highly price sensitive (ii) strong threat exists from potential competitors (iii) opportunity cost exists to reduce the unit cost of production and distribution with increase in volumes.
  3. 3. Growth Stage Pricing Strategy During the growth stage of the product , new competitors enter the market and more customers start using the product. Industrial marketers therefore , face a pressure of lowering the price below the introduction stage. In the growing market , the industrial marketers tends to focus on product differentiation, product line extension and building new market segments. Industrial buyers follow the purchasing policy of developing more than one supplier as more supplier enter the market. This puts the pressure on the innovator firm to lower the price.
  4. 4. Maturity Stage Pricing Strategy In the maturity stage of the product, the competitors are well –entrenched and aggressive. To increase the sales volume , the marketer has to cut into the competitor’s market share. This can be achieved by adopting the pricing strategy of lowering the price to match the competitor’s prices.
  5. 5. Decline Stage Pricing Strategy In decline stage ; • if the company has built a reputation of good product quality and dependable service, it need not cut the price but reduce the costs to earn some profits. • Another strategy is to cut the prices to increase the sales volume above break-even volume and use the product to help sell other products in the product mix. • If Some of the competitors have withdrawn from the market, the industrial marketer can even consider selective increase in prices for some segments of the market which are not price sensitive.