It is my responsibility as the new VP of Marketing at Clipboard Tablet Co. to firstly analyze the performance of my predecessor, and secondly, provide an in-depth analysis of the performance of the X7, X6, and X5 tablets. The goal of the analysis is to focus on the products, and take into account all the related factors which include the product life cycle, and competitiveness in the market. In addition, the analysis will include a thorough financial performance review of each of the three products. The financial performance review will focus on the price, per unit margin, total sales, and overall profitability. Moreover, the analysis will include a detailed market review that will cover topics such as sales, both new and old, and the market saturation levels. Lastly, the concluding part will provide recommendations for Research and Development spending, and also propose a change in the pricing strategy.
Upon reviewing the performance of the previous VP of Marketing, Mr. Joe Schmoe, it seems that there was a sense of satisfaction from the performance of the three tablets, and, therefore, the whole project was left unchanged. However, as it proved though, Mr.Schmoe was incorrect with his assumptions, as the company CEO, Ms. Sally Smothers, is of the view that the tablets never met the potential they had. The development was lackluster, and so was the marketing. More specifically, Mr.Schmoe was wrong with a few key issues. First of all, he had little concern for the ever changing market forces, and hence, no changes were made to the products, despite knowing that each performs distinctly. In addition, Mr.Schmoe had little regard for future estimates and forecasts, as no adjustments were made taking these factors into account. He is also negligent to make any adjustments based on future predictions and estimates. The key areas where Mr.Schmoe's performance was found wanting are manufacturing, R&D, and marketing(including advertising).
The impact that Mr.Schmoe's passive nature has had on each product's performance has been severe. The X7, though recently launched and competitively priced, has fared the worst. In fact, such has been the disappointment with the X7 that the project might altogether be sidelined. The total losses have been a whopping $23 million, a figure that needs to be turned around soon. Although the X5 and X6 tablets have been churning out profits, their potential it seems, has not yet been fully realized.(Elson)
Going into more detail about each of three products and analyzing their pros and cons, The X5 tablet has so far, proved to be a cash cow for the company. It sales figures have increased dramatically from 968,979 units to 1,647,592 units within a single year. The increased sales figures when coupled with a total increase in costs, has put the profitability percentage at 30% in 2012 from 16% in the previous year. There is a general consensus that the X5 is the company's leading product, and will continue to make profits in the near future. Moreover, the consumer feedback of the X5 has been positive as well, with no issues about product performance. Therefore, it makes sense to cut down the R&D budget of the X5 by 10%, with the freed up funds being allocated to keep the product fresh in the form of software updates. The X5's stay on the market and positive performance can also effect the performance of other products, such as the X7. In addition, although the market is saturating quickly, it has not yet reached its zenith, so there is still some time to create new customers in the future. (Elson)
The X6, has performed well, but the performance has not been as good as the X5. Profitability levels, helped by increased sales (562961 units in 2011 to 1288999 units in 2012) for the X6 have shot upwards from 16% in 2011 to 28% in 2012. Moreover, the costs have also doubled from $204 million to $400 million. As far as R&D costs are concerned, it seems that the costs will go down in the future as the X6 is beginning to find its feet in the market. The X6, like the X5, is expected to perform better in the future. The market for the X6 though, is a performance oriented one. Therefore, customers shopping for the product are not concerned about price, as a higher price is a sign of exclusivity. Finally, the costs for the X6 can be brought down as well, and this can be achieved by reducing the R&D spending and bringing it down to 15%. The freed up cash can then be used to perform software and hardware upgrades in the future.(Elson)
While the X5 and X6 tablets have been performing reasonably well, it is the X7 that is in need of the most attention. Since the X7 is a new arrival on the market, it requires increased R&D spending, so it makes sense to spend 75% of the R&D budget on its construction. The proposal also makes sense when we consider the market for the X7. The market values both price and performance, so these aspects must be kept in mind. Although initial sales for the X7 at 165586 units have been healthy, the product is yet to cover its costs. Moreover, while the increase in R&D spending is going to shoot costs upwards, the X7 competes in a market that has a lot of potential, and we believe that we can cater to a niche and cover the costs in no time at all.(Elson)
Pricing of the three tablets is also a big concern. This is mainly to support the sales of the X7, so the prices of the X5 and X6 will have to be adjusted accordingly. Currently, we charge $190 for the X7, a price that I believe is a little too high since customers in the market value both price and performance. The X5 and X6, on the other hand, compete in markets where price does not affect consumer behavior. Therefore, by increasing the price of the both the X5 and X6, we can increase revenues while at the same time, decrease the price of the X7 and bring it down to $175.
The strategy we are looking to adopt is geared towards helping the X7 realize its true potential. While increasing the price of the X5 and X6 might affect their sales, I believe that the overall effect will be minor at best. Moreover, there needs to be a quarterly analysis performed on each tablet. The analysis will focus on both the financial, and quantitative side of things. The goal is to adopt a strategy of continuous betterment, where quality and customer satisfaction is a priority. I believe that the changes proposed will help the company overcome the hurdles it faced under Mr.Schmoe, and we will finally have a strong market for all of our products.
Works Cited
Tablet Development Sim. (n.d.). Tablet Development Sim. Retrieved February 19, 2014, from http://forio.com/simulate/jelson/tablet-development-sim-1/simulation/#p=page0
