Strategy Analysis of Time Warp 2's Tablet Sales

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Time Warp 2 was carried out with the following strategy: 2012 2013 2014 2015 X5 $265/ 0% $265/0% $257/0% Discontinued X6 $474/50% $474/50% $474/0% $474/0% X7 $117/50% $117/50% $117/100% $117/100% With this strategy, the objectives are as follows. The X5 is going to sell out, and the company wants to sell out this product at the highest possible price that will still result in a sellout. The X6 has sold out in the past, but the new pricing strategy for the X6 has the objective of profit maximization, rather than maximizing unit sales. The analysis has therefore given this a much higher price. The X7 has a much lower price. The analysis revealed that the greatest economic value added was going to be if the unit sales were high, but some profits were maintained. The price points were determined by taking into consideration two different factors. The first is cost-volume-profit analysis. Using this analysis, the amount of contribution per price point was determined. This told us a few useful things, such as when to cancel the X5, and how low the price on the X7 could go without costing the company profit. In addition, the price elasticity of demand was determined through careful study of past time warps. With the elasticity slope and the contribution margin, the point of maximum profit could be determined. These price points are only good for a given R&D expenditure level, but were expected to be optimized for those levels. The result of this set of

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