Question at position 6 Which statement about the product life cycle as a pricing constraint is most accurate?Fads will generally have only two price points—high and low—but the values of those price points usually will be within 10 percent of each other.The newer a product is, the higher the price that can usually be charged.Once a product is considered nostalgic, the price will continue to rise indefinitely.The later in the product life cycle a product is, the higher the price that can usually be charged.Prices should not be changed until a product reaches its maturity stage.

Question

Question at position 6 Which statement about the product life cycle as a pricing constraint is most accurate?Fads will generally have only two price points—high and low—but the values of those price points usually will be within 10 percent of each other.The newer a product is, the higher the price that can usually be charged.Once a product is considered nostalgic, the price will continue to rise indefinitely.The later in the product life cycle a product is, the higher the price that can usually be charged.Prices should not be changed until a product reaches its maturity stage.

BlackTom AI · Accepted Answer

Question at position 6 asks about the product life cycle as a pricing constraint. Here’s a breakdown of each option to understand which one aligns with PLC pricing dynamics.

Option 1: 'Fads will generally have only two price points—high and low—but the values of those price points usually will be within 10 percent of each other.' This statement imposes a narrow, circular rule on pricing for fads that isn’t a standard or reliable principle in pricing strategy. In reality, fads can experience rapid price changes, and the gap between high and low points is not constrained to a 10 percent range; pricing is more often driven by demand, novelty, and competitive moves than by a fixed proximity between two points.

Option 2: 'The newer a product is, the higher the price that can usually be charged.' This aligns with the classic practice of price skimming or premium pricing during the introduction stage of the PLC. When a product is new, early adopters are often willing to pay more, costs are high, and the firm aims to recover fractory development expenses. Therefore, higher introductory prices are commonly justified to maximize early margins.

Option 3: 'Once a product is considered nostalgic, the price will continue to rise indefinitely.' This describes an unsustainable and simplistic assumption. Nostalgia does not guarantee perpetual price increases; demand tends to fade over time, and price appreciation would typically reverse as the market shifts and competition intensifies. Prices rarely rise indefinitely in the nostalgia stage.

Option 4: 'The later in the product life cycle a product is, the higher the price that can usually be charged.' In most PLC scenarios, prices tend to decline or stabilize as products mature, face competition, or become commoditized. This statement contradicts common pricing trajectories where prices are maintained or reduced rather than increased in later stages.

Option 5: 'Prices should not be changed until a product reaches its maturity stage.' This is overly rigid. Real-world pricing often involves adjustments before maturity (introductory discounts, promotional pricing, bundling) and continues after maturity due to competitive dynamics, demand changes, or cost shifts. Holding prices fixed until maturity can erode market share.

Taking all options together, the one that best reflects established PLC pricing behavior is Option 2, which describes higher pricing when a product is new and entering the market. The others rely on inaccurate or overly simplistic assumptions about price behavior across the lifecycle.

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