Which of the following statements regarding pricing constraints is most accurate?
A) When a product is in the introductory stage of the product life cycle, there is very little latitude in setting the initial price since consumers still don't know what the product can really do.
B) A company has more latitude in setting an initial price if the product is in the introductory stage of its life cycle and is the only product in the line.
C) The greater the number of products in a company's product line, the less the product features of similar products can affect price.
D) The newest addition to a company's product line should always have the highest price in order to maintain the value of existing brands.
E) To avoid cannibalization, the newest product addition to a company's product line should never have a price lower than the other offerings in the line.

Question

Quizplus · Accepted Answer

When a product is in the introductory stage of its life cycle and is the only product in the line, the company has more latitude in setting an initial price since there are no other products to compete with. This allows the company to set a higher price, which can help recoup the costs of development and generate revenue for future product development. As the product becomes more established, pricing constraints may become more significant, as competitors enter the market and consumer demand becomes more established.

Which of the Following Statements Regarding Pricing Constraints Is Most