Why might a business reduce a product's price during the growth phase of its life cycle?

A business may choose to reduce a product's price during the growth phase of its life cycle primarily to respond to competitive pressures. As competitors introduce similar products, the market may become saturated, leading to price competition. By lowering the price, a business can maintain its market share and attract price-sensitive customers. This strategy can help in solidifying the product's position in the market at a time when it is critical to build a customer base and establish brand loyalty.

Offering a lower price can also incentivize customers to choose a particular product over competitors, making it more appealing in a crowded marketplace. This approach can drive higher sales volumes, which is essential for achieving economies of scale and improving profit margins over time. Thus, pricing strategies in response to competition are essential during the growth phase to ensure continued success and expansion.