Advanced. A company has carried out extensive product research and as a result has just launched a new innovative product unlike anything else that is currently available on the market. The company has launched this product using a marketskimming pricing policy.

The market in which it operates is highly competitive and historically success has been achieved by being the first to market with new products. Only a small number of companies have survived in the market and those that remain are constantly aiming to develop new products either by improving those already in the market or by extensive product research.

Required:

Explain, with reasons, the changes that the company may need to make to the unit selling price of the product as it moves through each of the four stages of its product life cycle.

(10 marks)

CIMA P2 Performance Management