Description
A number of factors contribute to the pricing strategies for a product. Considering the segments in the simulation, what pricing strategy would be most effective considering both the market’s needs and the product life cycle? As the product moves through the life cycle, how should the pricing strategy change?
Beena Shaji
Jan 4, 2024, 4:23 PM
Submitted
Hello, Sir and Class
The strategically executed pricing decisions adapted from each phase of the product life cycle, from the introduction to decline, are considered a journey. In the early stage of the product, the main objective is to generate buzz and fascinate the product’s early adopters. In this product introduction stage, the strategies for pricing are skimming and penetration of the price. In the product growth and maturity stages, the method is competitive pricing. Finally, the value pricing strategy is adapted to the saturation and declining stages (Gupta et al., 2021).
Market-penetration pricing would be the most practical regarding the simulation elements and the product life cycle requirements. The reason is that such a strategy involves firms charging the minimum cost and presumes the market is price-sensitive. This will discourage customers from selecting rival firms while raising awareness at the same time. Therefore, the strategy will swiftly draw in customers when the firm begins offering the new product (Gupta et al., 2021).
In the introduction stage of the product, to attract a more significant portion of customers, the price penetration strategy involves starting with a lower price. The focus shifts when the product is in the growth stage; at this point, market share expansion and solid market presence are all that matters. The line pricing strategy creates a melodious harmony by offering different pricing options for different versions of the same product, addressing the diversified taste of the customer (Gupta et al., 2021).
With pricing strategies like dynamic pricing, competitive pricing, and value pricing, fixing the product’s price feels like a chess match at the maturity stage because of the competitive pricing. This involves matching the rivals’ prices, providing discounts, and arranging promotional and loyalty programs (Ji et al., 2022). Value pricing focuses on the value that the customer is getting from one’s product, with the experience and comfort. The product price is adjusted on the fly to have sufficient revenue despite being competitive in the dynamic pricing strategy.
Like the recalculation of GPS, searching for alternative routes can be the product’s pricing strategy in the saturation stage. The cost-plus pricing strategy sets up the price by adding the production cost with the desired profit margin. Despite this strategy, psychological pricing, geographical-demo graphical pricing, and bundling options exist. Lastly, in the declining phase, the plan for pricing the products is more like a concert where the price liquidation is considered the final act (Ji et al., 2022).
In a product journey from the initial to saturation stage, the pricing strategy involves contentious adaption in every phase of the product life cycle. Efficient business decisions regarding the product’s pricing strategy can be made by correctly understanding the product life cycle to attract consumers and have a competitive advantage.
References
Gupta, V., Ivanov, D., & Choi, T. M. (2021). Competitive Pricing of Substitute Products Under Supply Disruption. Omega, 101, 102279. https://doi.org/10.1016/j.omega.2020.102279
Ji, Y., Li, Y., & Tang, W. (2022). Service Investment and Pricing Strategies in E-Commerce Platforms With Seller Competition. International Journal of Information Systems and Supply Chain Management (IJISSCM), 15(1), 1-21. http://doi.org/10.4018/IJISSCM.287131
Professor question
Post: Optional, but counts towards your weekly Participation Points
RE: DQ 1: Pricing Strategies: Good, Better, Best
Beena and Class:
Hey Beena: Appreciate your feedback on pricing strategies. Yes, lots of research will help yield best price per situation.
Hey Class:
We’ll be covering a number of Pricing Strategies, and this one uses an example of products at a café.
Check it out (just to 5 min, 46 sec)
Question
If you owned a similar café: which one bit of info in this vid helps the most? Why?
Thanks for watching / reading,
Professor John Troutman
Reference
Wade, T. (2016, Feb. 26). Pricing strategy: An Introduction. [Video] YouTube
