PRICING OVER PRODUCT LIFE-CYCLE
PRICING OVER
THE LIFE-CYCLE OF A PRODUCT
Many products
generally have a characteristic known as ‘perishable distinctiveness'.
This means that a product which is distinct when new, degenerates over the
years into a common commodity. The process by which the distinctiveness
gradually disappears as the product merges with other competitive products has
been rightly termed by Joel Dean as "the cycle of competitive
degeneration". The cycle begins with the invention of a new product,
and is often followed by patent protection, and further development to make it
saleable. This is usually followed by a rapid expansion in its sales as the
product gains market acceptance. Then competitors enter the field with
imitation and rival products and the distinctiveness of the new product starts
diminishing. The speed of degeneration differs from product to product. The
innovation of a new product and its degeneration into a common product is
termed as the life-cycle of a product.
There are five
distinct stages in the life-cycle of a product as shown in Figure I.
Figure I: Life-cycle of a Product
