Pricing Strategy

ACTIVITY: November 21, 2022
QUESTIONS:
1. What is the importance of a product life cycle in pricing a product?
The product life cycle is heavily associated with marketing, but it can help
small business owners create new products, strategize pricing, and understand
current industry trends.
These are the importance of the product life cycle in pricing a product
 Helpful in sales forecasting.
 Helpful as a predictive tool.
 Helpful as a planning tool.
 Helpful as a control tool.
 Helpful in framing marketing programs.
 Helpful in price determination.
 Development of new product.
 Comparison of different products.
2. Describe the different characteristics of the different stages of the product

life cycle.
Introduction stage
- It is the 1st stage, wherein the product is launched in the
market with full-scale production and marketing programs. Its characteristics
include:
• Low and slow sales.
• High product price.
• Heavy promotional expenses.
• Lack of knowledge.
• Low profits.
• Narrow product lines.
Growth stage
- The product enters its 2nd stage.
The product achieves considerable and widespread approval in the market. The
sales and profits increase at an accelerated rate. Its characteristics include:
• Rapid increase in sales.
• Product improvements.
•Increase in competition.
• Increase in profits.
• price reduction.
• Strengthening the distribution channel.
Maturity stage
- The product now has to face keen competition which brings pressure on prices.
Though the sales of the product rise but at a lower rate.
Its characteristics include:
• Sales increases at decreasing rate.
• Normal promotional expenses.
• Uniform and lower prices.
• Product modifications.
• Dealer’s support.
• Profit margin decreases.
Decline Stage
- This is the final stage, sooner or later actual sales begin to fall under the impact of
new product competition and changing consumer behavior.
Its characteristics include:
• Rapid decrease in sales.
• Further decrease in prices.
• No promotional expenses.
• Suspension of production work.
3. Select a product you are familiar with and explain the stages of the
product’s
life cycle and different ways in which a company can extend its maturity
stage.
NOKIA
Introduction stage (1995 – 2002)
 Launched very few models due to lesser demand and innovation.
 GSM and CDMA phones
 Launched 1st model Nokia 2110 with Nokia tune
 2110 was 1st model capable of sending/receiving SMS
 Competed with then-market leader ‘Motorola’
Growth stage (2003 – 2009)

 Launched phones without an external antenna
 Had better features like games, alarm, ergonomic keypad, display, etc.
 Models like the Nokia 3310/3315 marked the beginning of the growth stage
 Launched models like N95 to compete with Apple’s iPhone
Maturity stage (2009- 2011)

 Launched a lot of touchscreen models
 Launched 1st Maemo 5 OS phone N-97
 Focused on E-series phones to compete with Blackberry
Decline stage (2011 Q3 – present)

 Upgraded its Symbian OS with ‘3’ and ‘Belle’
 Shifted focus on Windows as its main OS
 Launched 1st Windows phone, Lumia 800
 Used Symbian only in low-end models
4. If you are a businessman in today’s situation we are experiencing The

COVID-19 pandemic what product can you sell in the market and how will
you price the product? Explain.
 In the current COVID-19 pandemic, many businesses are struggling to find

ways to keep their business afloat. As a result, many businesses have been
forced to look for new products that they can sell in the market.
Businessmen have to be creative in today's difficult economic situation.
With the outbreak of the COVID-19 pandemic, many businesses have been
forced to close their doors. However, there are still some opportunities for
businessmen who are willing to be creative. One option is to sell products
that are in demand during the pandemic. One of the products that have been
in demand in the market is hand sanitizer. Hand sanitizer is a product that
can be used to clean hands and kill germs. However, pricing the product
correctly is essential to make a profit and keep the business going.
Businesses need to make sure that they are not overpricing or underpricing
their product.
5. If your product is in its maturity stage what are the strategies or remedies
that you can do as a marketer to prevent it from its decline stage? Explain.
Pricing Strategies that can be applied in the maturity stage.

a. Competitive Pricing Strategy
- is the process of strategically selecting price points for your goods or services
based on competitor pricing in your market, rather than basing prices solely on
business costs or target profit margins.
Many companies continue using this Strategy since in the maturity phase, price
competition becomes intense, a broader range of distribution channels are
deployed and competition is more focused on competitive pricing, marginal
product differences, or the difference in services or promotions.
Companies decide to use a Competitive Pricing Strategy that usually competes in a
heavily saturated marketplace since just a small difference in price can make the
deciding point difference in getting the sale.
b. Discount Pricing Strategy

- is a pricing strategy that offers a lower price for a product than its usual full price
for a limited time. It involves marking down the prices of products and offering
different deals with the ultimate goal of increasing sales.
The former aims to garner attention and interest from new customers to increase
the overall amount of sales made. The latter aims to appeal to existing customers
to increase the overall amount of products sold per transaction.
• Product modification is enhancing existing products by making essential

modifications to their qualities. Be it nature, size, packaging, and color, among
other things, to respond effectively to changes in market demand. Product
modification aims to retain current demand, attract new customers, and
efficiently contend with competitors.
Modifications to a product’s functionality might make it more beneficial to a

broader audience, expanding the product’s market. This adjustment can put a
product in a better competitive position. By delivering benefits that competing
products don’t have.
How a product looks, smells, tastes, feels, or sounds influences a buyer’s choice to
buy, a style change could significantly impact sales.
• Market modification is also one of the possible strategies that a company may
adopt for its mature products, which are facing a slow-down in sales. Under this
strategy, a company may do several things. These include:
1. It looks for new users and market segments.
2. It tries to increase usage among present customers, and
3. It may also reposition the brand to appeal to a larger or faster-growing segment.
6. Which stage of the product life cycle is most challenging?
Maturity Stage
- The third stage of the product life cycle can be a challenging time for
manufacturers as they look to maintain their market share while growth slows
down. It can be hard for businesses to maintain profit margins with the
product as other companies get into the market with their products and the
market potentially becomes saturated.
7. How does pricing affect the product life cycle?
- Product life cycle pricing is a strategy for selling products in which pricing
correlates with a product's location in its life cycle. Pricing over the course of
a product's lifecycle makes sure that consumers are continually drawn to one
brand over others. A tool for marketers, designers, and managers alike,
product life cycle pricing ensures the entire success of a product in a market.
Smart pricing methods can help businesses get the most value out of a
product or service. Rising sales don't automatically signify advancement, and
falling sales don't always portend eventual disaster. It can result in consistent
sales for a company if product pricing is determined by an understanding of
its function and significance.
8. Which pricing strategies do you use in each stage of the product life cycle?
 Introduction stage- prestige pricing or promotional pricing

This is the stage when the product is introduced to a market and when it can either
succeed or fail. If the product finds buyers that are interested in the product, then it
will move on to the next phase, the growth phase. There are a few ways to price a
product that is in the introduction stage. The business can demand customers to
pay a premium for their product if they have been technological advances added to
the new product or if the product is an entirely new piece of technology. However,
if the product is so unique that customers need some time to understand its
potential, then a high price for the product is not ideal. A reduced introductory
price, even a freebie, works well in these situations as it allows customers to ease
into a product they are unfamiliar with.
 Growth stage- price skimming

The growth stage occurs when a product is gaining traction and discovering new
markets and customer demographics. After a certain period, that growth with
plateaus due to market saturation. Throughout the growth stage, businesses will be
able to increase production, which reduces the cost per unit. If a company can
reduce its product prices while maintaining healthy profits, then the popularity of
the product will continue to drive high profits. The high profits will also allow
companies to expand into new markets and new distribution channels.
 Maturity stage- competitor-based pricing

The maturity stage comes into effect when the growth of a product plateaus.
Adding to that, the market has been fully penetrated and the product is stable. A
contributing factor to the maturity phase is that competitors may have started
offering something similar. The maturity phase is also the best time for companies
to make the most money because they will have plenty of information about the
marketplace and the production costs are no longer an issue. As long as companies
find ways to stand out from their competition, they will continue to cash in on their
product. If competitors start using cost-cutting tactics, the business should do the
same since they'll still be able to profit.
 Decline stage- price reduction
This is the stage where the product that was initially hailed as groundbreaking
starts to become edged out by the market or better products within the market. New
products and new technologies will also come along and sales for the original
product will begin to dip. Companies know all there is to know about the
manufacturing process and costs are as low as they will ever be. They are in a
position where they can lower prices to keep the product as low as
possible. Companies have other products going through different parts of the
product lifecycle so a drop in demand for the older product won't lead to many
problems within the business.
9. What stages of the product life cycle that has a price reduction?
- When sales reach the maturity stage, they start to slow down after
experiencing a significant rise. At this stage, businesses start lowering their
prices to stay competitive against the escalating competition. During this
stage, a company starts to improve its efficiency and learn from its errors
committed during the introduction and growth phases. Marketing initiatives
often place more emphasis on difference than exposure. As a result, product
features might be improved, costs might be decreased, and distribution
might get more involved. Products start to transition into their most lucrative
stage during the mature period. While sales are rising, the cost of production
is falling.
10. What stages of the product life cycle that has a price increase?
Growth stage
- In the growth stage, consumers start to take action. They buy the product;
the product becomes popular and results in increased sales. There are other
companies also that notice the product as it starts getting more attention and
revenue. When the competition is heavy, a higher amount of money may be
pooled into the market. The market for the product expands and it may also
be tweaked at this stage to ensure some features are improved. Competition
may also force you to cut down the prices. Nonetheless, sales increase and
therefore the product and market growth.
Group members:
Cudal, Meliza
Datul, Jossa Camille
Lopes, Natasha Kaye
Orpilla, Jamaica
Salazar, Mark Xavier

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ACTIVITY: November 21, 2022

2. Describe the different characteristics of the different stages of the product

Growth stage (2003 – 2009)

Maturity stage (2009- 2011)

Decline stage (2011 Q3 – present)

4. If you are a businessman in today’s situation we are experiencing The

 In the current COVID-19 pandemic, many businesses are struggling to find

Pricing Strategies that can be applied in the maturity stage.

b. Discount Pricing Strategy

• Product modification is enhancing existing products by making essential

Modifications to a product’s functionality might make it more beneficial to a

6. Which stage of the product life cycle is most challenging?

7. How does pricing affect the product life cycle?

 Introduction stage- prestige pricing or promotional pricing

 Growth stage- price skimming

 Maturity stage- competitor-based pricing

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