Product life cycle starts with product development. Here the company starts to develop the product and has high expenses with no sales. The next stage is the introduction stage where sales are slow, little or no profit, high distribution, and high promotion expenses. During this stage the company is trying to get …show more content…
These are used to determine pricing and represent a perceived value for the consumer and company. The first c is company objectives in which pricing decisions are based on the company objectives. There are 4 main orientation that companies have that determine a pricing strategy. Profit oriented in which they demand to make a certain amount of return from each product. So they set the price accordingly in to achieve their ROI(Return on Investment). Sales oriented are focused on increasing sales and price in away that helps increase sales. Customer oriented they focus on customer expectations by matching prices to customer expectations. For example a hotel company is going to price there luxury end hotels more then there limited service hotels. And these both will marketed towards different customers. Competitors oriented, they are going to price in order to protect from other competitors from entering the market. The next c is the consumer. Know what consumers want and value the most can help determine how the company should price. If the product has a special feature they are able to price it a higher price. But need to be careful because consumer are sensitive to price increases for certain goods. That is why it is important to use a demand curve to help determine the best price for the product. The next c is cost. There are three main cost associated with businesses and products which are variable, fixed, and total cost. Some companies perform a break even analysis that allows them to know what price point to have in order to make their money back. The next c is competition. Depending on which type of completion you are in determine how you can price. In a monopoly can set your own price because you don 't have to worry about other competitors. How ever this different for oligopoly. In oligopoly there are few companies that run that segment. This cause there to be