3a PLC or Product Life Cycle is a concept used to describe the stages a product goes through Penetration pricing: This

g: This strategy involves setting a low price for a new product to attract
from its introduction to the market until it is eventually phased out. The four stages of the customers and gain market share. Once the product has gained acceptance, the price may
product life cycle are introduction, growth, maturity, and decline. be raised.

Let's take the example of a smartphone to illustrate the concept of PLC.
Introduction stage: In the introduction stage, the product is new to the market and sales are
low. Companies focus on creating awareness about the product and building its reputation.
In the case of a smartphone, the company may invest heavily in advertising campaigns and
offer special promotions to encourage customers to try out the new product.
Growth stage: In the growth stage, sales increase rapidly as the product gains acceptance in
the market. Companies start to focus on expanding distribution and improving the product's
features. In the case of a smartphone, the company may introduce new models with
upgraded features and make them available through more retail channels.
Bundling pricing: This strategy involves offering products or services as a bundle at a
discounted price to encourage customers to purchase more than one item.
Psychological pricing: This strategy involves setting prices that are perceived as more
attractive to customers, such as pricing products at $9.99 instead of $10.00.
Dynamic pricing: This strategy involves adjusting prices in real-time based on factors such as
demand, inventory levels, and competitor pricing. This can allow firms to maximize revenue
by charging higher prices when demand is high and lower prices when demand is low.

Maturity stage: In the maturity stage, sales growth slows down as the product reaches
market saturation. Companies focus on maintaining market share and profitability by cutting
costs and improving efficiency. In the case of a smartphone, the company may offer
discounts and bundle the product with other accessories to maintain market share.

Decline stage: In the decline stage, sales start to decline as the product becomes outdated
or is replaced by newer products. Companies may discontinue the product or focus on
selling it in niche markets. In the case of a smartphone, the company may stop producing
older models and focus on introducing new models with more advanced features.

Here is a diagram that illustrates the four stages of the product life cycle for a smartphone:

PLC_diagram_smartphone

b) The marketing mix strategy would vary between different stages of the product life cycle
as the product's characteristics and market conditions change over time.

In the introduction stage, the marketing mix strategy would focus on creating awareness and
generating trial for the product. Companies would invest heavily in advertising and
promotions to make customers aware of the product's features and benefits. Pricing may be
high to recoup the costs of research and development.

In the growth stage, the marketing mix strategy would shift towards expanding distribution
and improving the product's features. Companies may lower prices to attract price-sensitive
customers and increase market share. Advertising may focus on the product's unique
features and benefits compared to competitors.

In the maturity stage, the marketing mix strategy would focus on maintaining market share
and profitability. Companies may offer discounts and bundle the product with other
accessories to maintain market share. Advertising may focus on building brand loyalty and
reminding customers of the product's features and benefits.

In the decline stage, the marketing mix strategy would focus on maximizing profitability and
phasing out the product. Companies may offer the product at a discounted price to clear
inventory and focus on introducing new products with more advanced features. Advertising
may focus on selling the product to niche markets or discontinuing it altogether.

*6*a) Several factors can affect price sensitivity and influence the pricing strategy of a firm,
such as:

Consumer behavior: The behavior of consumers plays a significant role in determining price
sensitivity. Consumers who are price-conscious and always looking for deals or discounts will
be more sensitive to price changes. On the other hand, those who are less price-sensitive
and more concerned with quality or brand image may be willing to pay higher prices.

Competitors: The pricing strategies of competitors can also affect a firm's price sensitivity. If
a competitor offers a similar product at a lower price, customers may switch to the
competitor's product, making the firm more price-sensitive.

Product differentiation: The degree of differentiation between a firm's product and its
competitors' products can also influence price sensitivity. If a firm's product is unique and
has no close substitutes, customers may be willing to pay a premium price for it, making the
firm less price-sensitive.

Economic conditions: Economic conditions, such as recessions or booms, can also affect
price sensitivity. During a recession, customers may become more price-sensitive as they
have less disposable income. In contrast, during a boom, customers may be less price-
sensitive and willing to pay more for products.

b) Here are some of the most common pricing strategies adopted by firms:

Cost-plus pricing: This pricing strategy involves adding a markup to the cost of producing a
product to determine its selling price.

Value-based pricing: This strategy involves setting a price based on the perceived value of a
product or service to the customer. This may involve considering factors such as the benefits
the customer will receive from the product or service, the level of competition in the
market, and the customer's willingness to pay.

Skimming pricing: This strategy involves setting a high price for a new product with unique
features or benefits to recoup the cost of development and create a perception of
exclusivity.