Clipboard Tablet Co: 2012-2015 FULL REPORT

Clipboard Tablet Co: 2012-2015 report

Introduction. This report presents the results of a four years’ strategy, spanning from 2012 to 2015. The strategy revolves around three products, X5, X6 and X7, and it is based on R&D’s budget, plus a throughout analysis of sales and performances on the market.

Clipboard Tablet Co: 2012-2015 report

The strategy that I have used started with questioning the real necessity of a third product, the X7: while this product had a much larger customer base than X5 and X6 it was possible to argue that a larger customer base was not always the only way to make a growth for the company (Brandenburger & Nalebuff, 1995). Instead, I agreed with the view of Mozzucato (2002), arguing with the idea that a small niche could be a great payoff for the company than a large marketplace. So, my strategy was based on our two existing products, X5 and X6, without having a third one. Every year, looking at the performance, market saturation, sales and other indicators, I chose a different action in order to achieve the objective of maximizing the company’s profit.

Clipboard Tablet Co: 2012-2015 report

I’m going to analyze the performance of this strategy in the report, showing some results and the overall score of my choices, dividing the report in one section for each year considered.
The report is heavily based on the results of the analysis, with the support of some theories and best practices scenarios from credible websites and books alike.
Moreover, at the end of the report it is possible to find some graphs that give a visual representation of the situation.

Clipboard Tablet Co: 2012-2015 report

 

2012: My decisions in this report were based mainly on the first data I’ve seen regarding the performance of X5 and X6: the market saturation was low for both products, starting as 15% for the X5 and 8% for X6 and both had a customer base of six millions. The X5 hadmainly first-time customers and the same were for the X6, although the fact the X6 was the most recent product was clearly visible by the sales numbers (Financial and Market Info, Clipboard Tablet Company).

Clipboard Tablet Co: 2012-2015 report

A new product was available, the X7: while it was possible to see the potential of the product in terms of customer base and price, dividing the research and development budget evenly between these three products, it seemed inconsistent with the previous years and the ultimate objective of the company. If our customer base and the market always knew us for the quality of our products, perhaps launching a cheaper option would have been perceived as a result of spending less on the quality, and this would automatically link the existing products, as well as the whole company, to a general lower quality perception.
Being an established niche isn’t necessarily a bad thing; trying to move in other directions could change the way customer base perceives the company, and obviously our identity as well (Dalgic&Leeuw, 1994).


Clipboard Tablet Co: 2012-2015 report

Following my declared strategy of remaining a niche company, my first decision was to discount the X7 starting from 2012. The immediate consequence of this choice was to have a lot of room for the research and development budget for the other two products. Considering that both of them had shown great performances on the market, and keeping in mind the objective of being more of a niche, a higher support forresearch and development  was advisable, that led me todivide the budget in 50% for X5 and 50% for X6.  To support additional costs for the previous raise in research and development, I raised the price up to $300 for the X5 and $450 for the X6. The rise of the prices should not be a problem in terms of sales, as the current customer base was more interested in having a great product with an excellent technical support.

Clipboard Tablet Co: 2012-2015 report

Based on the performance from that year, a number of possibilities were open for the next, like adjusting the strategy coherently with the long term objective of discounting an entire product. The data about market saturation was particularly important in determining the next decisions, as they indicated when it was wise to start a slow decrease of price and research and development budget.

 

Clipboard Tablet Co: 2012-2015 report

2013: At the end of 2012 the situation showed a crescent curve of saturation for both products, higher for the X5 at 27% and at 16% for the X6. For the X5, the first-time customersincreased of almost six thousands hundreds units, while the repeat sales almost doubled. For the X6 the first-time customers almost doubled, while the repeat sales were over seven thousand hundreds. The profitability of both products also almost doubled, going from 16% to 30% for the X5 and from 16% to 28% for the X6, with an overall improvement of the profitability from 16% to 26% (Financial and Market Info, Clipboard Tablet Company). In all the considerate aspects, the curves had not yet reached their peaks, so a continuation of the previous year’s strategy was made for 2013, while at the same time I started to give more resources in terms of research and developmentto the X6, the newest product available. For the X5, besides the reduction of research and development budget, a little decrease in the price would follow, as the product become older.
Clipboard Tablet Co: 2012-2015 report

Following the same strategy as the year before, the research and development budget for the X5 would decrease to 40%, while the budget of research and development for the X6 would rise to 60%. I followed a similar strategy for the price, cutting the price of X5 to $285, and making no change to the price of the X6.
This strategy is consistent with the objective of the company, and also it took into consideration the fact that in the following years the products will reach market saturation (even if I did not know exactly when the product would reach this point) as well as a limited customer base. Again, the Clipboard Tablet is a niche, so keeping those aspects in mind should be prudent and wise.

Clipboard Tablet Co: 2012-2015 report

At the end of this year, if the elements of market saturation, profitability and sales will continue to build the thread seen this year, a similar strategy could be applied in the research and development budget. For the price, small changes could be done in future for the X6, while the X5 should not change price in the future, as it could not repay the value invested into the product itself.
As the Clipboard Table Co.  Become a more mature industry, the niche market was a global competitive strategy, looking also at the new tendencies form customers (Parrish et al., 2006). The marketing strategy could also focus on non-monetary related values, such as durability, quality of the technical support and overall trust of the company.

Clipboard Tablet Co: 2012-2015 report

2014: At the end of 2013 the data available suggested that the strategy put into action continued to give its fruits. The total profit growth from 256 million ca. to almost 538 million ca. and the total profitability growth from 29% to 34%, where the single profitability for each product reached 34% as well. Looking at the market saturation, for the X5 it reached almost 50% (the actual percentage was 44%), while for the X6 it reached 32% (Financial and Market Info, Clipboard Tablet Company).  That was an important indicator, as it told that for the X5 the company had almost reached half of its customer base, and in the following year it would probably be the same case for the X6. As the customer base decreased, it was important to focus on repeating sales, and research and development  budget to maintain and grow the profit for the company, without having a third product that could support the lack of first-time customers.

Clipboard Tablet Co: 2012-2015 report

Continuing with the strategy for the previous years, the decision was cutting the research and development budget up to 30% for X5, while rising to 70% for the X6. As for the price, X5’s price remained the same while the price of X6 dropped to $430.
X6 was our top product, and with the extra support of the research and developmentbudget, it could continue to be so, while for the X5 it was still necessary to have a technical support without dedicating to it too many resources. It was possible to imagine that in the next one or two years, the X5 would have registered a fall in terms of sales and profitability, as the market saturation continued to grow, so my decision was also supported by this knowledge. The objective was to be able to be prepared for that occurrence and still be able to make a profit out of it.
In this year, it could be wise to start the development of a third product. It could be a good asset to have if there would be the possibilities to launch something more valuable than the X6, with the same customer base. This hypothetical product could replace the X5 and X6 in the following years, as both products will reach their market saturation.The already existing X7 does not apply to those requirements, so at this stage it would have been useless to introduce it in the market.

Clipboard Tablet Co: 2012-2015 report

 

2015: At the end of 2014 the situation presented was very similar to my hypothesis at the end of 2013. The market saturation of X5 reached 71%, while for the X6 it reached 61%. Sales of X5 started to decrease, as there were less potential new customers. The overall profitability of the company lost only one point percentage, going from 34% to 33%, even if the total profit continued to grow from 1.05 billion ca to 1.3 billion ca.
During this year, a further cut on the research and development budget, as well as on the price, would not have been a recommended strategy. Theresearch and development  budget’s cut for the X5 had the potentialto impact on the repeat sales, where a high-quality research and development is still necessary, while for the X6 it is necessary to have the greater part of the budget, as it represents the top product and has a wider margin of grown (Financial and Market Info, Clipboard Tablet Company).
The strategy I used in this year was of making no change, both in terms of price and R&D budget.

Clipboard Tablet Co: 2012-2015 report

The overall profitability for the following year could achieve and pass 1.5 billion, while at the same time it is wise to start thinking about the company’s future as these two products go into their final years.
While probably the strategy proposed did not achieve the possible maximum profitability, I ran a simulation to compare my results with a three products strategy, where the X7 would have launched in 2012. It turned out that, while in terms of market saturation it did not change very much, the same could not be said about overall profitability, as a three products strategy would not have passed the 1.5 billion thresholds (Summary, Clipboard Tablet Company).

Clipboard Tablet Co: 2012-2015 report

 

Conclusion. This report explains and illustrates the strategy used in a four-year period (2012-2015) for the Clipboard Tablet Co. The strategy used, discounted as quickly as possible the launch of a third product, the X7, choosing to focus on the X5 and X6. During the years, small adjustmentshave been made in terms of research and development budget, and price. In 2012, the R&D budget for both products was 50%, while the price has been raised for both, up to $300 for the X5 and up to $450 for the X6. Then, in 2013, the price of X5 decreased to $285, while at the same time the R&D budget decreased of 10%, going from 50% to 40%, with a consequential raise for the X6 budget. In 2014, a similar strategy was used with a decrease in the price of X6, going to $430, while the R&D was cut to 30% for the X5, with a 10% increase for the X6 (Financial and Market Info, Clipboard Tablet Company). In 2015, no changes were made.  The strategy has profited the company approximately 1.7 billion dollars versus the 1.5 billion dollars of a three products strategy, proving that while probably it was not the best strategy possible, it is still better than a three products strategy (Summary, Clipboard Tablet Company).

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