Dynamic pricing policy in a growing market for a deteriorating product

In this paper, we suggest an optimal pricing policy in a growing market for a deteriorating product. Here, the demand rate is considered as a function of selling price, time and stock level. When the product is introduced into the market, the demand for the product increases slowly according to the performance of the product and depending on market conditions. In maturity stage, the demand is gradually increasing and hence the need arises of developing a pricing policy in a growing market. This paper proves that there exists an optimal increasing-price policy, especially in a growing market for a product. The final recommendations are made based on a sensitivity analysis.