Transcript PLC and Pricing

Intro
Growth
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Maturity Decline
Sales
Profit
TIME
Introduction
Companies Focus
is on Promotion
and Production.
Product
Awareness #1
concern.
Pricing
Strategies:
Skimming and
Penetration
Setting a high price in the intro. Stage: large Profit Margin
•Trendsetters – willing to pay the high price to own 1st
•Disadvantages
•High profits attract competition
•Profit maximization is short term
•Problematic if initial price is way to high
Setting a low price in the into. Stage: Goal create demand
•Most effective for products w/ elastic demand
•Advantage
•Large amount of product is sold to a wide range
of customers (demo, geo, and psychographic)
Intro
Growth Maturity Decline
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Sales
Profit
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GROWTH
Characterized by:
• Increasing
sales and
Profits
• Focus on
consumer
satisfaction
• Competition
increases
• Modifications
begin
Sales increase quickly (marketers want to keep the product at
this stage for a long time)
 Cost per item drops due to increased sales
 Price changes depend on how the price was set in the
introductory stage
 If skimming pricing was used in the introductory stage, the
price and sales should be closely monitored for a decline in
sales; then price will fall
 When penetration pricing is used, the price usually remains
unchanged but promotion is used to continue the high sales
Intro
Growth Maturity Decline
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Sales
Profit
TIME
Maturity
Characterized By:
•Sales level off
•Profits drop
•Competition heavy
•Target market owns
•Marketing dollars
used fighting off
competition
•Do you continue to
Modify product
Sales begin to fall
 Marketers search for other target markets by
introducing new uses for products, trying to stretch the
life of the product
Marketers look for psychological
Pricing methods to stimulate sales
From the competitors
For example, when a large portion of consumers have CD players.
Marketers will use modify product to maintain price or have sales.
Intro
Growth
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Maturity Decline
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Profit
TIME
Decline
Characterized by:
•Profits could be
Smaller than cost
Choices:
Drop product
Sell / license prdt
Regionalize prdt
Modernize prdt
Sales decrease and profit margins decline
Price Discounts evident
for the product to
compete in discount
stores.
Example: Lever brother discounted
Pepsodent toothpaste and Lifeboy
Soap and advertised the products
with phases, such as “compare
and save”.
.
Intro
Growth
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O
L
L
A
R
S
Maturity Decline
Sales
Profit
TIME
How does this
Compare to
the Family
life cycle?