265 Section 10.2 Price Copyright Goodheart-Willcox Co., Inc. 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 charge more for the product because customers are likely willing to pay more for it. If only a few people want a product, demand is low. If there are more products than there are people who want them, supply is high. In this situation, the price for the product must be lower to encourage customers to buy it. Pricing affects supply and demand as shown in Figure 10-3. A market is elastic when a small change in price produces a relatively large change in the amount of the items demanded. A market is inelastic when the price of a product has no effect on the demand for it. Pricing Objectives Pricing objectives are the goals defined in the business and marketing plans for the overall pricing policies of the company. Nonprice competition relies on a product’s value and qualities. Anatoly Tiplyashin/Shutterstock.com