The choice of a pricing strategy is essential for optimizing sales and shaping the profitability of a product by manipulating its value both upwards and downwards. It is vital to consider that products undergo periods of growth, maturity, and eventual deterioration. Understanding market needs and the life cycle of a product is critical in determining pricing and fine-tuning business strategies (Kienzler & Kowalkowski, 2017). The development stages of a product entail four distinct phases, namely, introduction, growth, maturity, and decline. During the introduction phase, marketers project low sales volumes, higher costs per unit, and minimal profitability (Kienzler & Kowalkowski, 2017). In the growth phase, the sales begin to increase, lowering costs per unit, and boosting profits. At the maturity level, maximum sales are realized, and the prices for customers plummet tremendously (Kotler, 2016). Lastly, the decline phase is characterized by decreasing sales from the peak. Costs remain low for consumers, while profits start to fall.
In the context of marketing bicycles, the focus is on adopting a new technology of material and 3-D printing. The most effective strategy is market skimming since it will lead to the realization of quick results considering this position. This approach is perceived as optimal since a production volume cost does not reduce profitability. The pricing strategy not only features the quality of the product but also inhibits new players from entering the market (Kotler, 2016). The product’s lifecycle experiences constant adjustments in pricing to counter competitive forces. However, the market-skimming strategy does guarantee market stability. As a result, a transparent pricing strategy is essential in winning and retaining consumers in the long term. Customers are often fascinated by the knowledge of products and the organizations that manufacture and distribute them. Thus, the pricing strategy should be addressed vividly from the inception of the product and throughout its other stages of growth to create confidence in consumers.
References
Kotler, P. (2016). A framework for marketing management. Pearson Education Limited.
Kienzler, M., & Kowalkowski, C. (2017). Pricing strategy: a review of 22 years of marketing research. Journal of Business Research, 78, 101-110.