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Strategic Review The Performance Of Capstone Project

A drop to $150 would have been a good starting point in 2006, as it would have given us a better idea of the price elasticity of demand for this product. With this knowledge, a trend line could have been extrapolated that would allow us to determine the optimal price point, resulting in another price change for the subsequent years. R&D expenditures are not viewed as essential to this product, though maintaining the 33% level would have allowed the product to see some feature improvement over the years, given it a competitive advantage over other low-end handheld devices. The proposed four-year strategy therefore can be summarized as follows:

Year by Year Decisions: Pricing & R&D Allocations

PRODUCT

DECISION

2006

2007

2008

2009

X5

Price

$250

$250

$250

$250

R&D %

0%

0%

0%

0%

Discontinue?

NO

NO

NO

YES

X6

Price

$450

$450

$450

$450

R&D %

67%

AccountingCoach.com. Retrieved July 20, 2010 from http://www.accountingcoach.com/online-accounting-course/01Xpg01.html
Investopedia.com. (2010). Contribution margin. Investopedia. Retrieved July 20, 2010 from http://www.investopedia.com/terms/c/contributionmargin.asp

Kotelnikov, V. (no date). Customer value proposition. 1000 Ventures.com. Retrieved July 20, 2010 from http://www.1000ventures.com/business_guide/crosscuttings/customer_vp.html

Porter/QuickMBA.com (2007). Porter's generic strategies. QuickMBA.com. Retrieved July 20, 2010 from http://www.quickmba.com/strategy/generic.shtml

Quick MBA.com. (2007). The product life cycle. QuickMBA.com. Retrieved July 20, 2010 from http://www.quickmba.com/marketing/product/lifecycle/

Sources used in this document:
Works cited:

AccountingCoach.com (2010) Break-even point. AccountingCoach.com. Retrieved July 20, 2010 from http://www.accountingcoach.com/online-accounting-course/01Xpg01.html

Investopedia.com. (2010). Contribution margin. Investopedia. Retrieved July 20, 2010 from http://www.investopedia.com/terms/c/contributionmargin.asp

Kotelnikov, V. (no date). Customer value proposition. 1000 Ventures.com. Retrieved July 20, 2010 from http://www.1000ventures.com/business_guide/crosscuttings/customer_vp.html

Porter/QuickMBA.com (2007). Porter's generic strategies. QuickMBA.com. Retrieved July 20, 2010 from http://www.quickmba.com/strategy/generic.shtml
Quick MBA.com. (2007). The product life cycle. QuickMBA.com. Retrieved July 20, 2010 from http://www.quickmba.com/marketing/product/lifecycle/
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