P2 - C5 - Product Life Cycle and Pricing Strategies Flashcards
(18 cards)
Name the stages of the Product Life Cycle
Intro - Price Skimming
Growth - Penetration
Maturity - Consolidation
Decline - Niche, Harvest, Divest
What are the limitations of the product life cycle
Length of stages vary
Product stages can be skipped
How do you maximise profits over a products life cycle
Consider costs from the design phase
Reduce time to market
Extend the length of the cycle
What costs are attributed to each of the life cycle stages
Development - R&D
Intro - High fixed costs
Growth - More variable costs and production levels
Maturity - Stable costs
Decline - Decreasing variable costs
Potentially decommissioning costs
Name all 13 Pricing strategies
Premium pricing
Market skimming
Penetration pricing
Economy pricing
Cost Plus pricing
Psychological pricing
Product line pricing
Optional product pricing
Captive product pricing
Product bundle pricing
Promotional pricing
Dual pricing
Product differentiation
What is premium pricing?
The use of high price where the product is unique and a substantial competitive advantage exists
What is market skimming?
High priced new items to market, aimed at early adopters who are able to afford regardless of price charged
What is penetration pricing?
A low price is set to gain fast, high market share
What is economy pricing?
Low price for a service with no extras (Ryanair)
What is cost plus pricing?
Pricing goods at cost plus a percentage mark-up
What is psychological pricing?
Taking into account the way customers think as they purchase (High fashion branding)
What is product line pricing
A range of products where prices reflect the benefits gained (Silver, Gold, Platinum)
What is optional product pricing?
Optional extras sold alongside the main product (Extended warranty)
What is captive product pricing?
A captive market once the initial purchase has been made (Razors)
What is product bundle pricing?
Combining a number of products in the same package ()
What is promotional pricing?
Pricing to promote a product
What is dual pricing?
Different prices in different countries
What is product differentiation?
Varieties of the same product so they can be sold to a wider market (Toyota and Lexus)
