This was learned early when it was determined that price elasticity of demand was low. Elasticity of demand from features was high. While taking R&D funding away from this product to plugging it into the X7 resulted in an increase in X7 sales, that increase was not sufficient to negate the decline in sales of the X6. The result was a decline in total profit in 2009 in Sim III and Sim IV.
While the final run of the simulation was the strongest of the group, it could have been made stronger by blending some of the strategies from Sim II and Sim III. This would have allowed for a stronger 2009-year, which would have increased the total results. The strategy for the X7 was fairly strong, and the product was a major contributor to profit in all three simulation runs. The optimal price point was easier to understand for this product because it is less dependent on R&D investment. Thus, the adjustments to price on the X7 translate more directly to profit than price adjustments on the X6. R&D adjustments on the X7 are more difficult to determine, and early R&D strategy may have been a weak point in the running of these different simulations. However, the understanding that the X7 had margins that were too high initially was probably the biggest success in the entire simulation, as that added hundreds of millions to the bottom line immediately. Everything after that was tinkering.
Each round of adjustments increased the profit, something that can also be viewed as a success. It is believed that further rounds would continue to increase profit, especially as our understanding...
At a lower price point, this may not have happened. However, R&D seems to be a significant driver for the X6 model, since it has a premium position in the market. If it is to command premium prices -- which will be the case no matter if the price is $400 or $450 -- it needs to have premium features. Thus, it should retain its R&D through 2008, since
5 cents, so you lose $7,500 in contribution for every $1 you increase the price but you gain. This hints that price elasticity of demand is relatively low for this product, perhaps lower than previously believed. Increases in price will result in reduced sales figures but can be expected to bring in more profit as well. It is not expected, however, that elasticity is perfectly linear. It is worth testing
To maximize profit, the growth phase for the X7 should last through 2007-2009 in this simulation. The one-year R&D time lag effect means that to deliver a strong value proposition in 2007, R&D investment will need to begin immediately. Thus, some R&D monies will need to be diverted from the other products. Money spent on R&D in 2006 for the X5 will not have an impact of product quality
While the contribution margins of the X6 and X7 appear to be maximized, that only holds for the levels of R&D investment. A shift in the R&D investments levels, therefore, is critical to maximizing profit over the four years. This requires a greater understanding of how R&D affects demand for the two products. The X6 clearly benefits from a high level of R&D, but this impact may wane as
What assumptions did you make when you planed your strategy? Did these assumptions prove to be right, or was there something else you didn't think about that influenced your results? How will taking those factors into account affect your strategy in this upcoming run? Again, you need to crunch some numbers to determine how successful you were, where the greatest sources of profit are, and what changes make sense. Make
Pervasive Video Games as Art The form and function of art has evolved and changed quite a bit over the years, decades and millennia. Paintings and sculpture have been artistic mainstays for much to most of the world of the civilized human race. However, with the technological revolution that has roared up over the last fifty years or so, new forms of art have bubbled to the proverbial surface. Digital technology
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now