Tablet Strategic Review

Tablet Strategic Review

Trident University

Module 1 SLP

Course Number: Bus599

27 Oct 2011

The following paper is a response to Sally Smothers, CEO of Clipboard Tablet Co, review of the past four to six years of product development, sales, pricing, and performance against the competition. This market analysis will be used to determine the successes and potentials changes that should have been made during the past few years. A better understanding of these criteria will enable future decisions regarding the Tablets X5, X6, and X7. Following analysis will be broken down categorically by year and then further by model.

Overview

Joe Schmoe (former VP of marketing), set prices and research and development budgets constant from 2012-2015 for each respective product. Tablet X5 was sold at $285 each with a 33% R&D budget ($7,920,000), Tablet X6 was sold at $430 each with a 345 R&D budget ($8,160,000), and Tablet X7 was sold for $190 each with an R&D budget of $7,920,000. Of note, Tablet X7 was a new product line that rolled out in 2012. Despite fluctuations in sales and profitability, the R&D budget remained that same at $24,000,000 per year.

Year 1: 2012

Overall, 2012 saw a profitability increase of +10% to 26%.

Tablet X5

Tablet X5 saw an increase in sales of 40% between 2011 and 2012, resulting in an uptick in profitability (+14% change from previous year) to 30% profitability of $139,504,962 with a 30% increase in total costs. Accompanying this uptick in sales is an increase in market saturation, which rose from 15% to 27%. While this upward trend in saturation is characteristic of a product in the maturation life cycle stage, Tablet X5 still saw almost double the number of repeat customers. Since Tablet X5 performed so well, it may be beneficial to have reduced the R&D budget for the following year.

Tablet X6

Tablet X6 saw an increase in sales of 56% between 2011 and 2012, resulting in an uptick in profitability (+12% change from previous year) to 28% profitability of $ 154,134,825 despite a 50% increase in total costs. Accompanying this uptick in sales is an increase in market saturation, which rose from 8% to 16%. While this upward trend in saturation is characteristic of a product in the maturation life cycle stage, Tablet X6 more than double the number of repeat customers. Since Tablet X5 performed so well, it’s increase in profitability is mild compared