Significance of the product lifecycle in lifecycle pricing. CSR is no longer an ancillary practice for corporations that compete in the global marketplace.
Consumers across the world are demanding that, beyond the brand, companies demonstrate CSR company-wide and engage in ethical and sustainable practices in all or many facets of their operations.
Before we can develop an effective CSR measure all costs need to be included in the production process. This is achieved via the concept of lifecycle pricing. Read the case study, Lifecycle Pricing (p.192-195), in your textbook.
In a well-written paper, answer the following questions:
What is the significance of the product lifecycle in lifecycle pricing for companies that promote CSR?
What are the implications for a firm’s reputation when there is a dichotomy between the final consumer product and the inputs to its production?
Describe two examples of companies that, in the past, have not always paid attention to the product life cycle of their brands. What should they have done differently to be socially responsible?
Describe five steps to take as a leader in a global company to ensure that it is engaging in ethical and sustainable practices.
Product life cycle pricing is an important pricing strategy that allows companies to forecast and improve sales. The life cycle has several stages, from launch to declination, in which the product may behave differently in the market. If you’re a sales or marketing professional, you may want to learn more about product life cycle pricing and how it works. In this article, we discuss product life cycle pricing, including the four stages within it, its benefits and how businesses use it.
Product life cycle pricing is a strategy for selling products in which pricing correlates with a product’s location in its life cycle. There are four phases within the life cycle, including launch, growth, maturity and declination. Businesses use product life cycle pricing to better understand how discounts, clearance prices, new versions and marketing can affect their sales in each phase. A company may choose to strategize differently depending on the market and how its product sells.
Here are the four stages of a product life cycle and how sales for a product may look in each one:
The launch phase, or development portion of the life cycle, is when the company first introduces the product to the market. During this time, the business may record few sales, as the consumers within the market may be reluctant to purchase a new product. This can be especially true when a product is unique, resulting in lower competition but slower market acceptance.
The early stage within the product life cycle comes after the launch and is when demand for the product or service rises. Experts may call this stage the promotional stage, and it can be when marketing efforts may show positive results. During this stage of the cycle, competitors may release their own products to compete with yours.
The maturity stage, or the regular pricing phase, represents a plateau in the product’s sales and awareness. This is the time in the product life cycle where the product shows acceptable sales and profits. This may be the phase of the cycle where there is the highest level of competition.
Experts may also call the last stage in the product life cycle the clearance phase. It’s during this phase that consumers may choose an alternative product. Many companies plan to remove the product from production during this stage, as there is less demand for the product. In this stage, businesses may even lose money by continuing to produce the product.