Price

• Importance of Pricing:

  • Getting the price right can greatly impact the success of a product. Pricing decisions are influenced by factors such as technology, competition, market segment, and the product's stage in its life cycle.
• Pricing Strategies:

  • Low Price, High Volume: Setting a low price with the aim of selling in high volumes, typically resulting in lower profit margins.
  • High Price, Low Volume: Setting a higher price, resulting in fewer sales but with higher profit margins.
• Influences on Pricing:

  • Technology: Advances in technology, especially e-commerce, have driven prices down due to reduced costs for online stores.
  • Competition: High competition in the market can force companies to lower prices.
  • Market Segments: Different pricing strategies may apply depending on whether the target market is broad (mass market) or specific (niche market).
  • Product Life Cycle: Prices may vary as the product moves through different stages, from introduction to decline.
• profit margin


  profit as a percentage of selling price (one unit)or as a percentage of total sales revenues(for a whole business)
• mass market 


  a broad market segment that includes most consumers buying within the market
• niche market


  a small sub-section of a larger market in which consumers share similar needs
• product life cycle:

  • Introduction: A high introductory price may be used to cover development costs or create an exclusive image. Alternatively, a low price can attract customers quickly.
  • Growth: Prices may increase as demand grows and popularity rises, but sometimes prices are kept low to attract new customers and establish a strong market presence.
• product life cycle:

  Maturity: Focus on setting a price that maximizes profits. Often, prices are adjusted based on competition to keep loyal customers.

  • Decline: Prices are typically reduced to clear out stock or maximize remaining sales. Some firms may raise prices slightly if only loyal customers remain.