Morgan Stanley Training: Product Life Cycle Model under Direct Competition

When a initiative has been backed by the product life cycle ( both financially and non-financially) and gains approval from the management team, the business case templates is then maintained on an ongoing basis and adjusted to track the business project’s progress compared with the initial financial projections and key assumptions product lifecycle. This product life cycle model then becomes a working document used during the initiative management process.

If you are do not have enough price data points, your alternative is to quantitatively calculate pricing sensitivity product life cycle. Choose the price drivers that are most relevant to your situation. Determining a formula for pricing sensitivity is a multi step process, beginning with deriving the key price sensitivity drivers. Consumer driven alternatives can vary by consumer segment, by occasion, and other key drivers. However, depending your product offering, only a subset of these drivers are truly relevant. Determine the impact of each skimming price sensitivity driver. Experts say there are 9 main drivers to price sensitivity. Reference price effect is a common pricing driver. Buyer’s price sensitivity for a given product becomes higher the higher the product’s price relative to perceived substitute products. The higher the product-specific investment to the consumer applied to find alternate suppliers, the less price sensitive that buyer is when choosing between substitute products.

Skimming the market introduces the new service at a relatively higher price product life cycle. Price skimming product life cycle allows the organization to maximize its profits by getting the highest price consumers are willing to pay for. As more the landscape becomes more competitive and increase product supply, pricing will organically lower. Next, with time, as competition increase, the price is reduced. Price skimming is often called riding down the product life cycle curve. Price penetration involves introducing a product at a minimal starting entry price, usually lower than existing competing products in the available in the market.

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