Which of the following factors should be considered when setting the price of a new product?...
Which of the following factors should be considered when setting the price of a new product?
1)The price of substitute products.
2)The anticipated length of the product life cycle.
3)The degree of differentiation between the new product and existing products on the market.
4)All of the above.
im in debate if all of the above or only number 2
Homework Answers
The correct answer is - ( 4 ) All of the above
Explanation -
The product life cycle is one of the important considerations in pricing the product. However, price of substitutes and the differentiating factor (in competitive markets) plays an important role in the pricing. If the product is not a perfect substitute, but a close substitute of products in the market, the differentiating factor will help in pricing above the market price of similar products. Similarly, when there are too many substitutes and price elasticity of demand is high, the pricing has to be in-sync with substitutes.
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