PQ manufactures and sells consumer electronics. It is constantly working to design the latest

gadgets and must-haves which are unique in the market place at the time they are

launched. The management of PQ are aware of the short product life cycles in this

competitive market and consequently use a market skimming pricing strategy at the

introduction stage.

Required:

Explain the changes that are likely to occur in the following items at the three later stages

in the product life cycle of a typical PQ product.

(i) Selling price

(ii) Production costs

(iii) Selling and marketing costs