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Chapter 10 Product, Price, and Place
Product Life Cycle
The stage of a product in its life cycle influences pricing. In the
introduction stage of many products, the prices are often higher.
Higher prices may reflect the lack of competition and could help the
business recover some development costs.
When competitors enter the market during the growth stage,
however, they may set lower prices to attract new customers. Products
can become less expensive to produce during the growth phase, which
would also help to lower the prices.
During the maturity and decline phases of a product, prices are
often lowered even further to stimulate sales. Businesses hope to
recoup declining revenues by selling more items at lower prices.
Supply and Demand
The supply of available product and the demand for the product
sometimes determine its price. If everyone wants a product, demand
is high. When there are not enough products to meet demand, the
supply is low. High demand and low supply mean the business can
Nonprice competition relies on a product’s value and qualities.
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