Tablet SIM There are a number of different things that need to be taken into consideration when formulating a strategy for the next four years. The first thing is the product life cycle. Based on how long each of these products has been on the market, and the sales trajectory for the products, each is in a different stage of the product life cycle. Arguably, the X5 is headed towards the maturity stage, the X6 is in the growth stage and the X7 is in the introductory stage (QuickMBA, 2010). This has implications for pricing strategy in particular, but also for R&D strategy. A dollar of R&D investment today will have more years of impact with the X7 than it will with the other products.

With respect to pricing strategy, the X7's poor performance thus far implies that the product's current price might be a little too high. Sales are poor for an introductory product, so the first thing to consider with respect to pricing strategy is that the price of the X7 might need to be reduced. The other products can handle higher prices, judging by the relatively healthy sales levels that they have achieved thus far.

Positioning is another concept that needs to be taken into consideration here. There are a lot of different ways to look at product positioning. A common thread in the different approaches is that the positioning should align with the nature of the product and with the pricing strategy (Berry, 2012). Here we have three different products, each with a different position in the market. The X5 is a base model, the oldest in the line, and at $265 its price is moderate for the industry. The X5 buyer probably just wants a solid tablet with reasonable performance and a good price.

Based on its $420 price tag, the X6 is a premium tablet. The product has a lot of buyers,...

This means that it must have enough features to attract consumers even at the higher price, implying that the X6 should have premium positioning. The X7, with a $195 price tag, is the newest and cheapest in the line. That this product is struggling to win fans despite being the cheapest product in the lineup indicates that perhaps the X7 has very few features. The natural assumption, then, is that the X7 is being positioned as cost leader. With the X6 as a differentiated product and the X5 falling somewhere between the two, the three each have a different position in the market and the pricing and R&D strategy for each should reflect that. Given that each has a different position in the market, it cannot be assumed that a change made with one product will have any impact on the other products.
The strategy therefore will be as follows. For the first year, 2012, the decisions will be as follows: The R&D allocation will be changed to 10% for the X5, 40% for the X6 and 50% for the X7. The price of the X5 will remain the same. The price of the X6 will be increased to $450. The price of the X7 will be lowered to $160. If these strategies look like they are working, they will be held.

In future years, the following changes will be made. The X5 is expected to slip into unprofitability in a few years and when it looks like that is going to happen, the product will be discontinued. Additionally, the R&D expense will be gradually shifted to the X7 so that by the 2015-year 100% of R&D will go to that product.

The 2012-year saw the following results. The cumulative score is $664 million. The X6 is less expensive than competing products despite the price increase. The X5 has reached the shakeout phase, so now we will begin…