The Products and Product Life Cycle Clipboard Tablet Co markets three products, the X5, X6 and the X7. The first concept that comes to mind is the product life cycle. The stages of the product life cycle are introduction, growth, maturity and decline (NetMBA, 2010). The X5 is the oldest product in the lineup. It is moving from the growth to the maturity stage of the life cycle, with 31% market saturation. This means that there might only be a year or two of growth remaining in this product. For research and development this would mean that the R&D expense should be soon to be cut. It also means that the company needs to pay attention to this product entering the declining stage of the life cycle. At decline, the company needs to analyze if this product needs to be cut from the lineup. The X6 is at the beginning of the growth stage of the life cycle. This means that sales should be accelerating still, and that there is sufficient room for future growth. The X7 is in the introductory stage of the life cycle. Almost all of the potential market share for this product is in the future. Over the course of the next few years, these two products have the strongest growth potential, the X7 especially. In addition, R&D expenditures in these products will have more results than for the X5, because there are more potential future sales available. Pricing Strategy One of the decisions is with respect to pricing. The current pricing scheme is $265 for the X5, $420 for the X6
We evaluated our company’s position in the industry, and found ourselves in an excellent starting position to further develop our products and match them to the industry’s needs. Our market share is adequate and we can advance further with our strategy improve and reposition our products in the coming years. We have underutilized capacity, which we intend to improve, while increasing automation to reduce costs. We have plans to improve our promotion to improve product awareness and with the appropriate product lines we will increase price to improve margins and better align our high-end product image. Our current financial position is optimistic, showing our leverage (Assets/Equity) at 2.0, when our goal is to maintain 1.5-2.0 overall. By utilizing the analysis tools we are learning what elements are driving demand, how to effectively tailor our products through R&D, how best to adjust our marketing and pricing, while lowering input costs, in order to improve margins and to ensure our stakeholders are all satisfied.
new competitors and they will tend to copy the ideas of products and try to dominate the
The majority of our available resources, approximately 60%, will be allocated to High End and Performance sensors, as at the end of six years our goal is to control 35% market share in these two categories to become industry leaders. As mentioned above this will be done by increasing the amount of spending in research and development, production, and the marketing and sales budgets to match the projected sales forecast. The remaining resources, around 40% total, will then be distributed among the other three products as we would like to maintain a market share between 20-30% in each of the remaining categories. Being active in the secondary markets allows us to offset the
equipment in 2010, were considered as well. These values were converted to after-tax values by considering sales taxes and tax shields. The NWC (net working capital) requirement of the project was deemed to be 26.15% of incremental sales. To translate this into cash flows, we calculated the NWC change year-over -year. Additionally, we assumed management would maintain their commitment to expend 5% of sales towards R&D. Although Flash has already incurred a sunk cost of $400,000 to develop the prototypes for this new product line, it is reasonable to assume ongoing R&D expenditures to ensure the development of future iterations of this product once the current version becomes obsolete. Finally, the sum of these cash flows was discounted to the beginning of 2010 at a WACC of 10.05% to arrive at a final value of $757,528 for this five year commitment. The pursuit of this growth opportunity responds to the technological changes in the industry, resulting in high quality products, which are wellreceived by customers. The dedication to innovation and research will allow Flash to thrive in the market and maintain their competitive
Continuing the work and analysis begun in the first three SLPs, we again project ourselves back in time to the year 2012. I am in responsible for decisions on product development and pricing for the next four years for our line of tablets. I will show the score, financials and market data at the end of the four year period from my previous time discussions. Finally we can make a detailed discussion and analysis of the data using CVP analysis, and will explain why I recommend specific pricing and research and development (R&D) costs for the next four year period.
The framework used in this note is organized around the estimates of industry demand, market share, costs, and performance. All data
This is with the understanding that our new product is classified as a Star (high growth, high share business or products. They need heavy investments to finance their rapid growth. Eventually their growth will slow down and they will turn into cash cows. Chapter 2) on the Growth Share Matrix (A portfolio-planning method that evaluates a company’s SBUs in terms of market growth rate and relative market share. Chapter 2). Initially, in the introduction stage (The PLC stage in which a new product is first distributed and made available for purchase. Chapter 9) Anchor Alert will require larger amounts of funding to support the initial start-up fees, product productions, and building the early marketing, which will eat into initial
Opportunities: international market; co- operation with other bigger companies; launching of the new products; increasing tendency of the customer demand etc.
Reports.) But for most of us price matters, especially in a case like this, where the
Third Option – The next pricing strategy involves a pricing strategy where a low price on one product, boosts sales on a separate, but complimentary product. More specifically, Augustine Medical, Inc. could give the heater/blower unit away free of charge. In turn, the organization could set a price on the plastic covers that would yield a high
After analyzing the results from the previous quarter, it was determined that the prices set for each segment were not sufficient. Product sales priority were also not properly adjusted. With the R&D investments, sales priorities needed to be changed for the main focus to become the most profitable market segments. Prices were not competitive which in turned decreased revenue, market share, and profitability. To become more competitive we altered the prices in each market segment. The Workhorse product was the first to change, the price was lowered to $2500 in an attempt to increase sales; at this price Team 4 was still making a profit on this product, as well as making the price much more competitive. The Workhorse sales priority was also lowered to 3rd in Americas and 4th in APAC and EMEA. This product was not selling as well as we had hoped, and was no longer as profitable as it once was which led to this decision. Next, the Innovator product’s price was adjusted; this involved a price increase to $4100. This price was adjusted to include the new
Today’s highly competitive business world forces companies to create different tactics and relatively rely on multiple pricing strategies to conduct business.
Was to focus on convenience and "coolness" of the product. Price was not an issue!
Competition Based Pricing. The price under this route was determined to be $3,400 (see Appendix C). Under this route, the company will earn more profit per bundle sold. Additionally, minimal effort is required to determine the price. However, the competition based pricing creates indifference between the “Atlantic Bundle” and its competition. The higher price will also reduce market share and could stir a pricing war.
Based on these 6 factors in setting a price: selecting the pricing objective, determining demand, estimating costs, analyzing competitors costs, prices and offers, selecting a pricing method and selecting the final price, Singapore GP Pte Ltd employed 2 different pricing strategies. They are