Organizational Diagnosis, SLP 3: Time Warp

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Abstract

The past four years have felt like an eternity, as I have seemingly become involved in a sort of Groundhog's Day-esque sort of time loop. Personal preferences for the traditional space-time continuum set aside, the arrangement has no doubt given me a distinct professional advantage as the Vice President of sales and marketing for Clipboard Tablet Company. This time warp has allowed me the opportunity to review the market data of tablet sales from 2012 through 2016, and to use this gathered data to analyze and reconstruct my marketing plan to retain effective strategies, and reconfigure the less effective market strategies that were implemented. As a result, I have the unique opportunity to learn from past mistakes without consequence and improve upon them. The following report will analyze effective and ineffective market strategies implemented between 2012 and 2016. Further research and analysis will be reported, and a revised year by year plan that utilizes this new information will be used to create an optimized marketing strategy for Clipboard Tablet Company.

SLP 1 and 2 in Review

To review, SLP 1 outlined the decisions made by former Vice President of sales and marketing Joe Schmoe, who was in charge of the Clipboard Tablet sales before I assumed the position. It was previously noted that Joe Schmoe was mistakenly complacent in both pricing and R&D strategies, retaining static price points throughout his four-year tenure at the position. Mr. Schmoe failed to take into account the oft-shifting landscape that is the 21st-century tech industry, to his own demise.

Adjustments Made from SLP 1 to SLP 2 and Results

SLP 2 was the first attempt to analyze and rectify the mistakes made by former VP Joe Schmoe. The key revisions that I made to Joe Schmoe's strategy were: 1) Increase research and development funding allocations in both the X6 and X7 tablets, consequently reducing Research and Development funding for the primarily price-driven X5 tablet. 2) To significantly increase the initial price point of the X6, 3) to decrease the initial price point of the X7. Figure 1.1 in the tables section following the report shows a side-by-side comparison of SLP 1 and SLP 2.

The price-driven X5 model demonstrated a minimal need for research and development. Upon analysis, it was made evident that research and development funding allocated to the X6 and X7 models yielded greater profits. An adjusted price point kept the tech-deficient, price-conscious demographic satisfied with the product, as the product kept up with the performance standards of the competition. The X6 was released in 2012 at the price of $649, a significant increase from Joe Schmoe's initial $420 sale price. The target demographic was predictably adamant about purchasing this high-performance machine regardless of the increased price, and profits skyrocketed. The increased research and development allocation of the X6 ensured sustainable advancements in technology to compete at the top of the market for years to come

The X7 underwent large scale changes under the new regime. Research and allocation funding was dramatically increased, while the initial price point was significantly decreased from $195 to $119, with the goal of reducing the price of the X7 to a meager $99. While this strategy ensured a high performing and affordable product for an extremely large consumer base, the analysis confirmed that profits could have been much higher if handled differently.

Strengths of SLP 2 Adjustments

Overall, the initial SLP 2 adjustments were a success, profits increased across the X5, X6, and X7 models relative to the impotent strategies used by the first VP of sales. The re-allocation of R&D funds to the X6 and X7 models demonstrated a keen pulse on the future of the market, as technology-savvy consumers are on the rise across all demographics (Yang 2012 ). The profits of the X5 remained relatively unharmed, due to the target demographics' preference for cost efficiency over performance.

The recognition of market demand for the X6 was another sound observation, as profits increased after a significant price rise in 2012. Slight decreases in price paired with a steady commitment to R&D between 2013 and 2016 proved to be a successful strategy in sustaining sales throughout the shakeout phase of the product cycle.

Weaknesses of SLP 2 Adjustments

The previous strategy, although profitable, left money on the table when it came to the pricing and R&D strategies of the X7. Although the unbeatable price of $99 paired with 36% R&D allocation resulted in full market saturation by the end of 2015, the low price resulted in an inefficient and over-exhausted sales cycle that led to a significant drop in new sales in 2015, which spells trouble for 2016 for Clipboard Tablet Company. After assessing the weaknesses of the initial marketing strategy, a new and improved strategy has been designed with short term success in mind, as well as long term future growth.

SLP 3 Revised Strategy by Year

Analysis and new research are used as the basis for the revised sales strategy of Clipboard Tablet Company. Sustainable, residual future growth and product life cycle sales efficiency are the key drivers of the revised plan. As such, it has been assessed that the X7 will be the future of Clipboard Tablet company, as the product boasts the largest consumer base that has been largely untapped until this point in time (2012). The X5 and X6 models will feature plans that seek to sustain sales as efficiently as possible, under the condition that the majority of R&D allocation is reserved for developing the hyper-competitive X7, which will be the future of the company. The following are the year by year strategies of pricing and R&D allocation for each of the three tablets.

X5 2012-2016

X5 R&D adjustment will be reduced to 26%, and decreasing by 1% annually as to make room for increased R&D for the X7. Additionally, the price s fro 2012 and 2013 will be reversed, putting the 2012 price at $299, and decreasing to $289 in 2013. This strategy will take advantage of consumer behavior to act on a reduced-price purchase in the future, rather than an increased price (Kauffman et. al. 1994). This will result in more sustainable new-sales in the future, while also allowing for additional funds to be allocated to the X7. Additionally, the X5 is entering its third year and is consequently nearing the end of the shakeout phase, thus entering the maturity phase, which will significantly reduce the need to continue on with the research and development phases of this product. This is especially true considering that the X7 is ultimately poised to take the lion’s share of the price-conscious demographic while yielding a superior product by 2015, due to the increased R&D allocated to the X7, along with a decrease in the price of the X7.

X6 2012-2016

X6 will also receive a slight decrease in R&D funds, from 36% to 35%, a number which will remain constant through 2016. This was not an easy decision to make, as the success of the X6 is highly predicated on product performance. However, it has been determined that increased investment into the future of the X7 takes precedence over retaining the 1% R&D of the X6, which is quickly approaching the shakeout phase of the product cycle. The X6 will retain the initial starting price of $649, dropping to $529 (rather than $499) in 2013. The price reductions for 2014 and 2015 will remain the same, at $449 and $399 respectively.

X7 2012-2016

X7 receives a huge increase in R&D funding, from 36% to 39%, with plans to increase R&D by 1% yearly. The price will remain fixed at $119, as opposed to a reduction to $99. The strategy in mind is to generate early interest in the X7 with an initial price reduction to $119 (Oliver & Rust 2000 ). Any further reduction will prove unnecessary and inefficient due to the increased R&D. The renovated X7 will simply be a superior product at a competitive price, which will drive short term and long term sales into the future of the tablet industry. As previously mentioned, the X7 is poised to overtake the market that is accounted for by the current X5 model. By 2015, The X7 will simply be a superior machine to the X5, at a lower price point. This will appeal to both the price-conscious consumer as well as the cost-to-performance consumer, resulting in a takeover of both markets by the X7.

Projected Results

Overall, I project steady, efficient sales throughout the duration of the X5 and X6 cycles, including a profit spike in the year 2013 for the X6. The price reduction from $649 to $529 is sharp enough to attract consumers, and the additional $30 dollars will do little to deter sales. Steady but profitable declines are to be expected as both the X5 and X6 models enter their respective maturity phases.

The X7 will start relatively slow, as it is still a new product that was previously underdeveloped before the start of 2012. Significant increases in R&D funding will yield a superior product targeted at a massive demographic of over 15 million consumers, plus the remaining 5 million consumers that are currently in the market for the X5. Between 2013 and 2015, expect sales to rise significantly. I predict that the X7 will be the go-to tablet of 2016, paving the way for future success for Clipboard Tablets.

Discussion for Future Growth

Regarding the futures of the X5, X6, and X7 tablets, it is important to keep up with market trends, particularly in the volatile technology market. The X5 will predictably fall out of vogue due to the general public's increased technological awareness. I would recommend phasing the X5 out of circulation entering 2017, after a significant price reduction in 2017. Continuing the X5 would give clipboard tablet company no significant advantage, as the X5 will be a direct competitor of the X7, only inferior in terms of pure performance.

The X6 will always have a market among techies, so long as a commitment to R&D is established, to drive the innovation of the tablet. It is important to keep a pulse on the activity of the competition for this market, as the highest functioning tablet will prevail, and technology has been exponentially increasing for decades (Moore 1969). It is recommended by this executive that R&D be adjusted according to competitive standards.

The X7 Will be the future driver of sales for Clipboard tablets through 2018. A slight tapering off of R&D allocation could be made to accommodate for the competitive X6 in the future, as the X7 will have already established itself as the premier performance/value tablet in the industry, which generates sales in and of itself, especially among more innovative products (Basu & Dick 1994). Overall, a point should be made to retain the competitive advantage of the X7 to attract repeat customers, as new sales are likely to decrease as this product enters its shakeout phase. It is also important to ensure that the price of the X7 does not increase to the point of losing the market formerly known as the X5 market, who are primarily interested in price rather than performance. Nonetheless, it has proven increasingly efficient to provide the superior X7 at X5 prices, rather than to Provide both products separately, as the reallocation of funds into the matured X5 would only limit the future success of the X7, which as of 2012 was just beginning to enter the growth phase of new sales.

After a review of new data accumulated from the first time warp, and further research into market trends of the technology industry, one thing is obvious: The technology market is changing constantly. However, where there is change, a new opportunity to capture the market arises. The technology industry is a free market battlefield, where fortune favors only those who are bold enough to venture areas uncharted within the industry. I believe that the future of the X7 is an uncharted territory that warrants exploring. After reviewing the relevant literature, and experiencing a four-year time warp in which I have recently returned from, I am now aware that action must be taken now in order to remain ahead of the fast-approaching industry curve of high performing, affordable tablets, in order to capture a new market of customers by 2016, ultimately earning their loyalty for years to come, all of which will contribute to the current and future success of clipboard tablet company - the pioneers of the tablet industry.

(Tables omitted for preview. Available via download)

References

Basu, K. & Dick, A. (1994). Customer loyalty: Toward an integrated conceptual framework. Journal of Marketing Science, 22(2), 99-113. Retrieved from http://link.springer.com/article/10.1177/0092070394222001

Kaufmann, P., Smith, N., & Ortmeyer, G. K. (1994). Deception in retailer high-low pricing: A “rule of reason” approach. Journal of Retailing, 70(2), 115. doi:10.1016/0022-4359(94)90011-6

Moore, G. (1965, April 19). Cramming more components onto integrated circuits. Electronics Magazine, Retrieved from http://www.cs.utexas.edu/~fussell/courses/cs352h/papers/moore.pdf

Oliver, R., & Rust, R. (2000). Should we delight the customer?. Journal of the Academy of Marketing Science, 28(1), 86-94. Retrieved from http://www.researchgate.net/publication/235360992_Should_We_Delight_the_Customer

Yang, M. (2012, July 17). Tech savvy senior citizens on the rise. Retrieved from http://www.govdelivery.com/blog/2012/07/tech-savvy-senior-citizens-on-the-rise/