How does a firm’s pricing policy relate to the product’s life cycle? When a company launches a new product, it knows the product won’t last forever. However, the company does expect to earn a satisfactory profit to cover all the effort and risk that went into launching it. A firm can never accurately predict the lifetime of a product, but the lifetime involves four distinct stages. These four stages are collectively known …showed first 75 words of 1085 total…

…showed last 75 words of 1085 total…As sales and profits decline, some firms withdraw from the market. The remainder may drop smaller market segments, or cut the promotion budget and further reduce the product’s price. A product in the decline stage may prove costly to the firm in a number of ways. The product’s failing reputation could reflect on the firm in the long term, and keeping a weak product delays the search for replacements and damages current profits.