Tablet Development Company Products - Essay Example

? INTEGRATIVE PROJECT: Introduction The stability of products in the Tablet Development Company comprises of three offerings that are completely different. The X5 is the first level where consumers are conscious of the price. X6 on the other hand consists of consumers who are conscious of the performance and it offers technology savvy. Lastly, X7 combines both levels which consist of performance and price. Since the takeover of the VP post by Schmoe in 2012, the company balances development and research equally among the three products. None of the products aims at dominating the tablet market according to the confidence level the VP has in the company’s product. The only problem with the tablet company is a proper strategy on segmentation of the market focusing on profitability and life cycle of the products. Product X5 As X5 is marketed to be a tablet that is meant for customers who are conscious of price, it denotes the company’s median product line. The product line is in performance and price terms. X5 tablets are priced 285 dollars with a rated performance of 1.02 beginning in 2012. Taking default development investment and research, the values maintain their level of steadiness. Product X5 2012 2013 2014 2015 Price $285 $285 $285 $285 performance 1.02 1.02 1.02 1.02 The table above shows how Joe performed. In its early product cycle, the performance of X5 is favorable against competition. Its sales steadily grow through 2012, although as the phase of maturity develops during the year 2013, sales fluctuate drastically, (Marketing Teacher, 2000). If there are no price cut benefits to fuel further demand, X5 will rapidly change into the advanced phases of its life cycle. X5 2012 2013 2014 2015 Sales 1,647,592 2,145,622 1,853,177 963,776 Revenue 469,563,809 611,502,211 528,155,442 274,676,048 Variable cost 469,563,809 321,843,269 277,976,548 144,566,341 Total cost 330,058,847 404,763,269 360,896,548 227,486,341 Profit 139,504,962 206,738,942 167,258,894 47,189,707 Product X6 The X6 makes Tablet development company the highest in the technology line focused on customers that look for a tablet that performs well and that ready to pay an amount for it. X6 tablets are priced 430 dollars with a rated performance of 1.02 beginning in 2012. In the absence of enough R and D to maintain its edge of competitive technology, the performance rating deteriorates every subsequent year. Product X6 2012 2013 2014 2015 Price $430 $430 $430 $430 performance 1.02 1.02 1.02 1.02 The X6 benefit from strong sales inflowing 2012, the central of the introduction phase. The growth, nevertheless, tables into 2013, after which it fluctuates sharply via 2014. With X6 performance falling off to 1, the competitive advantage quickly degrades. It does not clearly receive the R and D investment which is required to give service to its targeted consumer. The table below shows the original promise of introduction phase of X6 that do not survive its transformation against competition. X6 2012 2013 2014 2015 Sales 1,288,999 2,134,931 2,364,061 1,118,142 Revenue 554,269,513 918,020,206 480,801,048 Variable cost 354,474,689 587,105,945 650,116,782 307,489,042 Total cost 400,134,689 632,765,945 695,776,782 353,149,042 Profit 154,134,825 285,254,260 320,769,459 127,652,006 X7 product The X7 stands for Tablets Development Company’s product contribution for the summative market. It does not either focus on price point or performance advantage. This tablet is of a mature product market where consumers look for a value established on a steadiness between price and required performance. Being in the category that is emerging, X7 starts 2012 at 190 dollars with a performance level of 0.97. The combination shows the product immaturity relative to the strategy that it fits in. The investment of R&D in X7 product increases the rate of performance throughout the considered time horizon, although never to a level needed to match its competition. Product X7 2012 2013 2014 2015 Price $190 $190 $190 190 performance 0.97 0.97 0.97 0.97 The X7 product is in the introductory phases that do not breech the lifecycle’s shakeout phase. There is a steady growth in sales, although anemically through the year 2015. As performance slightly improves, and price remains constant, the market gradually reaches onto its intrinsic value but not that fast to offset the initial losses which followed the growth rate. Furthermore, R$D and active pricing should be incorporated for X7’s performance to improve. This is illustrated in the table below X7 2012 2013 2014 2015 Sales 165,586 237,202 338,448 479,827 Revenue 31,461,253 45,068,365 64,305,057 91,167,056 Variable cost 9,107,205 13,046,106 18,614,622 26,390,464 Total cost 54,527,205 58,466,106 64,034,622 71,810,464 Profit -23,065,952 -13,397,740 270,435 19,356,593 Development decision The unit margin contribution is defined to be variable cost (VC) and revenue difference where VC comprises of any unit input needed to make it ready for sale. Calculation of CM enables a quick view of working leverage or how delicate sales fluctuation affects income (importance of contribution margin, 2009). By division of CM with working income reinstates the operating leverage. The tool gives an overarching view of how great investment would influence business performance. It also applies on how a particular product is profitable and what return is expected on investment of R$D. This decision, however, has limitations for instance; it only deals with the present time assumptions. The transition in the targeted market is not taken into consideration. Additionally, there is ignoring of product technological advances and because of this it should be applied for short period in making price decisions. Market review The computer tablet is an upcoming product and therefore, the Tablet Development Company should aim at targeting the entire market. It should be done by segmenting the market. This enables this company to reach different classes of customers that have optimum perception of certain services and products differently from others (Investopedia, 2011). As it is a new product, it will not apply to the entire market. Only the liberal consumers would go for the tablets as they are always in search of new solutions. They only purchase such products if they are of benefit (Centre for Business Planning, 1994). Such customers are potentials although conservatives’ applicants to a recognized tablet product. These consumers are the upcoming markets and finally would settle to X7’s technology. These consumers charmed with benefits derived from new technology, base their decisions on technical content being offered (Centre for Business Planning, 1994). The liberals are the adopters of the emerging products thus would make the main segment that provides TDC with a stable stream of returns at the business plan outset. Alternate strategy TDC has not performed well for the four years that have passed. The emergent market for these products gave the chance of translating from X6 and X5 sales to the adopters into the R&D applicable in the wider market via a view on the X7 technological development. 2012 should stop R&D into the technology of X5 and spread on the extra resources equally to X7 and X6 advances. As X5 reaches maturity in later stages of 2012, R&D does not yield the extra sales in the following years. Upgrades to X7 and X6 performance will, nevertheless, change into a competitive transformation phase for X6 and help X7 to capture a greater portion of the larger tablet market. 2013 should consider changes in prices to show the decreasing X6 and X5 competitive advantage. It should change into a lengthening price point life cycle of X5 for consumers who are budget conscious. Moreover, in case R&D is not in a position to keep X6 on the performance cutting edge, realistic cuts of price will be evident. X7 should endure its stable growth via 2013, with substantial R&D invested to position its future to be the main TDC offering in the market. 2014 ought to have made difficult decisions. Firstly, the discontinuing of X5 for X7, while the R&D ought to have disallowed the steep decrease in sales. Two added development years into X7’s performance would lead to an increase in price with a slight drop in sales in 2014. In reality, the stability of growth in X7 is evidence to the maturing of tablet market. This is because as the market broaden and grows past liberals, many conservative customers will eye at an approach that is balanced to the tablet product. 2015 ought to have given a substantial payoff into X7 and X6 market with increase in prices of X6 equal to R&D payoff. The substance of tablet company’s returns would be with X7 which is appealing and where advertising and branding efforts would be concentrated. References Tables were all developed with default assumptions as available on the Tablet Development Simulation. Retrieved July 2011 fromhttp://forio.com/simulate/jelson/tabletdevelopment Sim/simulation/#p=page0 Center for Business Planning, (1994). Market Segmentation. Investopedia, (2011). Market Segmentation. Retrieved July 2011 from http://www.investopedia.com/terms/m/marketsegmentation.asp Importance of Contribution Margin, (2009). Marketing Teacher, (2000). The Product Life Cycle. Read More