Tablet SIM There Are a Number of

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, and is gaining in market share. 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 to watch when that product might become unprofitable. The X7 is still performing below the competition, despite the drop in price and the increase in R&D allocation. The only change for 2013 is to take the R&D allocation from the X5 and give it to the X7, so that there is a 40% (X6) and 60% (X7) split.

This is consistent with the fact that the X5 has entered the shakeout phase and the X7 is still unprofitable. The results in 2013 saw a cumulative profit score of $1.031 billion. The X6 has now entered the shakeout phase, meaning that more if its R&D should go to the X7. The products are priced about the same as competing products and the performance of the company's products is also around average. Of note, the X7 is now profitable and has captured 5% market saturation.

Efforts for the remaining two years should focus on increasing the market share of the X7 dramatically, and to that end the price will be decreased slightly to $150. For 2014, the cumulative total is now $1.277 billion. The X7 is now in the growth phase, but the X5 has now lagged behind competitors as the result of the lack of RD & investment. The X5 is barely profitable anyway at this point, having earned only $5.9 million last year. Given declining sales, the X5 will now be discontinued.

Profits of the X6 are also declining, and all of the R&D allocation for that product will now go to the X7. The X6 has 85% saturation, so all of the room for growth is with the X7 at this point. The product remains profitable, even at the $150 price point. This price point will be maintained. The price of the X6 will be decreased to ensure that it reaches the saturation point in this year -- this is likely the last year for this product.

At the end of 2015, the cumulative profit is $1.543 billion. This falls short of the highest score which is around $2.1 billion. The X6 remained profitable in the 2015-year, which is good. The X7 made $198 million, which is almost all of the money that the firm made. As hoped, the X6 reached 98% saturation.