The Strategies of the Clipboard Tablet Company - Essay Example

? BUS599 MBA Integrative Project Module 4 SLP (School) Introduction The Clipboard Tablet Company is offering three products: the X5, X6, and X7 tablets. The tablets themselves are identified as having different features and different price points. The X5 tablet is designed for those who are concerned primarily with price over performance, while the X6 tablets are designed for those who are concerned with performance over price, and the X7 tablets offer the middle ground, for those who are concerned with both the performance of as well as the price of the tablets themselves. The company performs a CVP analysis with the goal of making decisions in order to determine the sales volume of the aforementioned product, and the profit margins of the product in the most effective manner (California State University, 2013). This analysis serves to emphasize the strategies that will need to be formulated and implemented in relation to the prices, as well as the research and development needed to enhance the performance of the company itself. The formulation of the strategies that are implemented by Clipboard on the basis of CVP (Cost, Volume, Profit) analysis will also be discussed. In order to determine the revised strategy to be used in regards to the pricing of these three tablets, R & D allocations, and any product discontinuations for the different ranges of tablets in the company, a CVP analysis must be done. A CVP analysis is regarded as a tool that is chiefly used for planning purposes, in addition to making valuable decisions, and furthermore is considered to be a powerful instrument in devising future plans for the company as well as increasing the sale of the products of the company itself. One major advantage of this tool is that it enables the company to make the appropriate decisions as well as planning for developing the three products in the business market at the beginning of the initial year, in this case 2012 (The McGraw-Hill Companies, 2011). The strategy of CVP analysis is generally used for calculating the break-even point, as well as determining the prices for attaining substantial profits by increasing the sale of the products themselves (Cambridge Business Publishers, 2005). As such, with the assistance of CVP analysis, the company is required to formulate certain strategies and generate plans that will allow for the profitability and productivity to exceed in comparison to their competitors. Product X5 The X5 has been on the market for five years at the time of this projection and analysis; it is said to have reached its stage of maturity. It is for these reasons that once the product hit 77% market saturation, it was determined to discontinue the product itself, as the only sales that would be generated would be for those who were buying replacement products; each year leading up to discontinuation showed a lowering in price in order to increase sales of the product itself. The results of this and the price points used are shown in a graph below. Year 2012 2013 2014 2015 Price 285 280 260 Discontinued Year 2012 2013 2014 2015 Installed Base 1,917,729 3,395,970 5,430,339 7,035,000 Remaining Customers 5,117,271 3,639,030 1,604,661 0 Market Saturation 27% 48% 77% 100% First Time Customers 1,478,241 2,034,369 1,604,661 0 Repeat sales 169,352 297,701 473,236 0 Total Sales 1,647,592 2,332,070 2,077,898 0 Product X6 The X6 has been on the market for a period of five years, and the decision to discontinue it for 2016 was made due to market saturation. In each year leading up to this, the price point was decreased in order to increase sales. At the end of the simulation, it was seen that customers pay about the same price for these products as they are for similar competing products, showing that prices and projections are well within adequate ranges. Year 2012 2013 2014 2015 Price 430 425 405 395 (X6) Year 2012 2013 2014 2015 Installed Base 1,066,018 2,238,333 4,209,188 6,550,000 Remaining Customers 5,483,982 4,311,667 2,340,812 0 Market Saturation 16% 34% 64% 100% First Time Customers 1,172,316 1,970,854 2,340,812 0 Repeat sales 116,683 239,900 443,567 680,722 Total Sales 1,288,999 2,210,755 2,784,380 680,722 Product X7 The X7 targets those who are concerned with price and performance, showing that it is a midline product, with cost and performance balancing out somewhere in between the high performing X6 and the cost effective X5. The market has not yet reached anything resembling saturation for this product, and its production would continue past 2015. Year 2012 2013 2014 2015 Price 300 295 275 250 Year 2012 2013 2014 2015 Installed Base 340,000 384,208 437,036 509,551 Remaining Customers 17,500,000 17,455,792 17,402,964 17,330,449 Market Saturation 2% 2% 2% 3% First Time Customers 44,208 52,827 72,516 108,431 Repeat sales 7,511 8,998 12,389 18,603 Total Sales 51,719 61,826 84,905 127,034 Development Decisions Clipboard would decide, based on these proposed projections, to discontinue the X5 for the year 2015, to discontinue the X6 in 2016, and to continue with the X7 while the next iterations of tablets are being developed and generated. The clipboard company would target the entire tablet market by developing the products like X5, X6 and X7. The company should keep in mind the rapid changing preferences of the customers while offering its products in the business market. As the tablet market did not developed as much, the company should effectively deliver its products concerning both price as well as performance and attain greater market share. Alternate Strategies By taking into concern the financial performances, it can broadly be stated that the customers have diverse perceptions of, and responses to Clipboard. On the basis of its financial records, it can be stated that a certain portion of the customers are satisfied with the products that are offered by the company. In order to cope with the fluctuating market situations, Clipboard would need to work on adopting certain effective alternative strategies. According to the above tables, the performance of X5 gradually declined in the maturity stage; Clipboard in this context may adopt certain changes in the features of the product. Moreover, the company can also emphasize upon R & D segment so that the sales of X5 increase. As the company succeeds in maintaining the growth of X6 product, the company would have to monitor the progress of the product incessantly as an alternative strategy so that its sales remain to grow extensively. In the X7 profit is steady in the maturity stage. The company would need to work on making certain technological changes, as well as investing a substantial portion, especially in the R&D segment, for making and preserving the growth of X7 product in future stages (Elson, n.d.). .Brief Discussion of the Report The Clipboard Company’s different products are targeted to different consumer markets on the basis of the requirements and preferences of the customers. The strategies employed may be observed to maintain the steady growth of the products themselves, and the strategies have provided the product with visible growth in the market itself. The final cumulative profit score is $1,260,758,214. Works Cited California State University. (2013). CVP analysis. Retrieved from http://www.csus.edu/indiv/p/pforsichh/documents/CVPAnalysisVideoSlides_000.pdf Cambridge Business Publishers. (2005). Cost-Volume-Profit analysis and planning. Retrieved from http://www.cambridgepub.com/managerialaccounting/070-103_Ch%2003_Morse.pdf Elson, J. (n.d.). Tablet development sim. Retrieved from http://forio.com/simulate/jelson/tablet-development-sim-1/simulation/#p=page0 The McGraw-Hill Companies. (2011). Fundamentals of cost-volume-profit analysis. Retrieved from http://highered.mcgraw-hill.com/sites/dl/free/0073527114/781445/chapter_3.pdf Read More