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Intro Growth D O L L A R S Maturity Decline Sales Profit TIME Introduction Companies Focus is on Promotion and Production. Product Awareness #1 concern. Pricing Strategies: Skimming and Penetration Setting a high price in the intro. Stage: large Profit Margin •Trendsetters – willing to pay the high price to own 1st •Disadvantages •High profits attract competition •Profit maximization is short term •Problematic if initial price is way to high Setting a low price in the into. Stage: Goal create demand •Most effective for products w/ elastic demand •Advantage •Large amount of product is sold to a wide range of customers (demo, geo, and psychographic) Intro Growth Maturity Decline D O L L A R S Sales Profit TIME GROWTH Characterized by: • Increasing sales and Profits • Focus on consumer satisfaction • Competition increases • Modifications begin Sales increase quickly (marketers want to keep the product at this stage for a long time) Cost per item drops due to increased sales Price changes depend on how the price was set in the introductory stage If skimming pricing was used in the introductory stage, the price and sales should be closely monitored for a decline in sales; then price will fall When penetration pricing is used, the price usually remains unchanged but promotion is used to continue the high sales Intro Growth Maturity Decline D O L L A R S Sales Profit TIME Maturity Characterized By: •Sales level off •Profits drop •Competition heavy •Target market owns •Marketing dollars used fighting off competition •Do you continue to Modify product Sales begin to fall Marketers search for other target markets by introducing new uses for products, trying to stretch the life of the product Marketers look for psychological Pricing methods to stimulate sales From the competitors For example, when a large portion of consumers have CD players. Marketers will use modify product to maintain price or have sales. Intro Growth D O L L A R S Maturity Decline Sales Profit TIME Decline Characterized by: •Profits could be Smaller than cost Choices: Drop product Sell / license prdt Regionalize prdt Modernize prdt Sales decrease and profit margins decline Price Discounts evident for the product to compete in discount stores. Example: Lever brother discounted Pepsodent toothpaste and Lifeboy Soap and advertised the products with phases, such as “compare and save”. . Intro Growth D O L L A R S Maturity Decline Sales Profit TIME How does this Compare to the Family life cycle?