Research from Exploration Paper:
At only $50 below the X5, Handheld need to either drop the price to $175 intended for the X7 to alleviate cannibalization from developing by the X5. The paradox however is that to lower the price tag on the X7 is to prolong the payback period just for this specific model, which is one of the most unprofitable from the entire organization. Ideally the X7 should have a higher price level associated with that, and in retrospection the better product strategy would have been to expand in to higher-priced versions where Handheld would have had ample room in terms of price points to identify. The new product needed to be approximately 30% or maybe more than the X6, with significantly nicer features including support intended for WiFi, online community apps which includes Facebook, Myspace . com, Twitter, Friendfeed and other features that could be converted into value-added services that could be upsold to buyers. A new product at the high end of the production would likewise give Portable the opportunity to move into the rewarding services sector as well, offering WiFi-based applications and content material syndication through partnerships with providers. Since X6 vividness is moving on at the most fast rate coming from all three products, this higher-end product strategy makes more sense than launching a $200 device that has very little strategic way apart from becoming a loss-leader. The X6 consumer loyalty is usually exceptional, further more supporting your decision to enter a higher-end portion than try to compete just on selling price. Despite this being the best course, Handheld has $12. 8M invested in the X7 and must substantially re-position the item to make this profitable.
Summary
Cancelling the X7 is impossible given the high RD costs sunk into the merchandise already. Portable must boost the functionality in the X7 through electronics upgrades that allow for related content services to be sold. By adding during these services and increasing features, Handheld can easily substantiate their very own price point of $200, but without significant differentiation in the product and service level, the X7 will languish and are unsuccessful over time. Hand held needs to locate new techniques for injecting increased value in the X7 and stabilize charges. Future product strategies should be focused on their very own higher-end portions of the marketplace as their most profitable catalog are getting quickly saturated and the loyal clients need a trade-up strategy in order to stay with Hand held.
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Eric G. Olson, Deepak
