Detailed Review of Pricing and R&D Strategy of X5, X6, X7 Research Paper

Detailed Review of Pricing and R&D Strategy of X5, X6, X7 - Research Paper Example In a recent survey, ChangeWave found that out of 3,043 survey respondents from North America, 14% gave positive response to purchase a mobile tablet in the next 3 months (Epstein, 2011). This rise in the consumer adoption of new technology determines the extent of future changes in the pricing and budget allocation for Research and Development (R&D) of its products. Tablet Development is focused on providing high quality and custom designed applications for tablets manufacturers and operating system providers. Its core products are X5, X6 and X7 that have been in the market for the last 6 years. However, there are major drawbacks in the existing price and R&D budget allocation strategies that have undermined the new product development cycle in the organization. 1.1 Aim: The aim of this report is to highlight the drawbacks of the existing pricing and R&D budget allocation strategy on a period of 6 years for the core products of Tablet Development and to recommend an alternative strat egy that should have been adopted to achieve the organizational goals. 1.2 Objectives: To critically review the strategy of pricing and R&D budget allocation for each core product, namely: X5, X6 and X7. ... The customer base also experienced 61% new customers, 94% repeat sales and 103% profitability. However, the R&D costs deteriorated by -33%. In 2011-12, the product X5 experienced 21% increase in its sales and revenue. The customer base experienced only 15% new customers, 72% repeat sales and 12% profit.ability However, the R&D costs remained stable with 0% change from the previous year. In 2012-13, the product X5 observed a severe decline as its sales dropped with a 23% change from the previous year. The customer base also declined by 36% of new customers. The losses increased to 17%. In 2013-14, the sales declined by another 51%, new customers by 81% and profitability by 88%. In 2014-15, the sales declined by 26%, new customers by 100% and profitability by 500%. In the entire life cycle, the product X5 remained at same price of $265 and R&D cost of USD 7,20,000 with nil change. As a result, the product market saturation declined from 84% in 2010 to 3% in 2015. The repeat sales also declined from 94% in 2010 to only 3% in 2015. 2.2 Product X6: In the period 2010-11, the product X6 the price was $420 and experienced a growth of 126% in its overall sales and revenue. The customer base also experienced 124% new customers and 81% profitability. However, the R&D costs deteriorated by -33%. In 2011-12, the product X6 experienced 60% increase in its sales and revenue and 53% increase in total costs. The customer base experienced only 56% new customers and 14% profitability. However, the R&D costs remained stable with 0% change from the previous year. In 2012-13, the product X6 observed a severe low increase as its sales dropped to 3% increase