Upon seeing long of people waiting for the product, sellers either hike the price or bring in more supplies if it were possible. If more suppliers are brought, equilibrium price goes back to normal. If supply cannot be increased, sellers increase the price of the product or service. In an efficient market, price increase brought about by a crisis of otherwise is natural. Due to surge in demand, people cannot get the same product at the original price during shortage.
In using this approach the initial dollar amount of a product is set lower, then overtime the items will slowly increases in price. This particular strategy helps to rapidly reach a wide fraction of the market to hopefully initiate positive word of mouth throughout our target market. This is our best option as a new business coming into the industry. Our main objective in using this method is to draw in consumers that might be unaware of what products we will be offering. In creating a new company and implementing innovative sales systems, we would like to take some of our competitors business by initially drawing customers in with offering lower prices.
The producer still advertises at a high level to fight off competition. Product starts to move into profitability. The cash flow starts to gain more revenue. Maturity: Sales growth begins to slow as market saturation is approached. Sales are kept going by those who are late to adopt new products.
Key terms maturity: The stage in the product lifecycle where sales growth ultimately peaks, then slows as the product reaches widespread acceptance, and competition is fierce. growth stage: The stage of the product life cycle where product sales, revenues and profits begin to grow as the product becomes more popular and accepted in the market. - markets in terms of consumers The consumer market pertains to buyers who purchase goods and services for consumption rather than resale. However, not all consumers are alike in their tastes, preferences and buying habits due to different characteristics that can distinguish certain consumers from others. These particular consumer characteristics include various demographic, psychographic, behaviorists and geographic traits.
Increasing prices of the company’s products, increases the quality perception. Quality is a key factor that customers consider when making purchasing decisions. Understanding that price is a measure of quality for many buyers. If the company increases the prices during the festivals, it would boost the market perception of their products. The not good effects would include; The company will probably suffer from sales drop.
Advertising and promotion activities are essential and competitors are not keen to consider. After market acceptance has been achieved, sales began to grow rapidly, and at this stage it will also attract competitors as demand has been proven. Finally the product moves into the sunset stage when the customers are offered alternatives, or they are no longer users of the products. Sales and cash flow begin to decline and no further investment by the business owner is expected. The following template has been create to facilitate the reader’s thinking and analysis.
In the growth stage, a few similar products might have entered the market, so there may be some competition present. Profits will improve in the growth stage as the sales revenues will rise also leading to inherent economies of scale. The company would still experience high advertising costs in order to attract a larger pool of customers, and in order to promote the superiority of their product over potential competitors (if any). Due to increasing sales volume, production volume will also be raised to keep up with the demand. When this happens, economies of scales will arise.
There may be a growing number of competitors who may introduce similar products or adapt their price and promotion policies. Maturity The maturity phase is where the profits and sales reach their peak. Profits are being maximised, but the firm has to fight to defend its market position. Sales are maintained by promotion, customer loyalty and product differentiation through alternations such as new packaging. At the end of this stage, the market becomes saturated.
The introduction stage of a life cycle appears to fall outside of the BCG matrix because it is characterized by small market growth but firms can still hold a high level of market share in the new market they are developing. The Growth phase appears to fall within the question mark quadrant because the market is growing at a very high rate but there will still be a large amount of competitors that will be seeking to capture the market leader position. SThe shakeout is a phase that appears to allow business units to be classified as stars because high rates of growth will continue (at decreasing levels) but the industry will begin to consolidate into firms with higher market shares as demand for the products become restricted to replacement or repeat purchases only. The maturity phase of the product life cycle allows business units to be considered cash cows if the firm has capitalized on the consolidation and declining growth discussed in the previous stage. In this stage, market growth will begin to flatten but firms still competing in the market will a hold large share of the market because of the consolidation occurring in the maturity phase that leads to an oligopoly.
Shifts in demands change the prices because the shift to sudden demand will make prices jump, companies that experience a sudden demand shift will raise prices to make more money because they know even if the price goes up the demand is so great that they will still have buyers. Same goes with if demand all the sudden drops a smart company will drops its prices to still keep revenues up.