Outline
Clipboard Tablet Co. is a firm that manufactures digitized tablets for the mass market with three main products namely; X5, X6 and X7 tablets. The former VP for marketing, Mr. Joe Schmoe has been responsible for product development, R&D and marketing of the company’s products.
As a new VP in charge of the company’s marketing department, my new task is to analyze the performance of Joe in the last 6 years on sales, profitability, product development and performance of the company’s products. In the process of conducting analysis, we will look into the organizational strategy that was used by Joe in the process of selling and marketing the products of the Clipboard Tablet Company.
Study
The major products that were sold by the Clipboard Tablet Company were the three tablet models of X5, X6 and X7. The main factors and drivers that needed analysis within the sales and marketing division are outlined below:
Sales
The Clipboard Tablet Co. like other companies value sales as an organizational pillar, since it is on this basis that companies build on value and product development. In the last six years, the company has experienced moderate growth with sales growing to high levels in the year 2012 before a dip in revenues was witnessed. In the year 2010, the X5 and X6 tablet models were the only tablets on sale contributing to $ 465 million in sales.
The following year, sales amounted to $ 927 million and this contributed to around a 99% jump in sales (Thierauf, 2011). The 2011 sales were inclusive of the revenues generated by the sale of the X7 tablet which contributed $ 30.3 million to the sales. Consequently, the year 2013 was the best for the company since sales peaked at $ 1,321 million representing a 187% growth rate over a period of 3 years.
The X5 tablet sold more than 936,000 units in the year 2010 while the X6 model sold over 517,000 units in that year. In terms of revenue and units sold, the company had the best revenues in the year 2012 and 2013 when the company sold 2.95 and 2.67 million units respectively (LaForge, 2010). The revenues of the three tablets differed in the last 6 years with X5 contributing $ 1.85 billion in sales while X6 brought in $ 2.88 billion and X7 revenue totalled $ 345 million in the last 6 years.
Although, X5 brought in a lot of revenues in terms of sales, the tablet’s revenue had been declining by double digit figures in the last three years up to 2015. While, the reverse has been witnessed for the X7 tablet which sales have been on an upward trend of around 30% per annum for the last 6 years (Thierauf, 2011).
Performance
The performance of the Clipboard Tablet Company will be undertaken based on the financial results, revenue and assessment against its competition. The company’s financial position has been marked by up and downs with the years 2011 and 2012 being the best for the company. In these years, the company realized profits amounting to $ 225 million and $ 386 million respectively.
Moreover, the revenues in the years 2011 and 2012 grew by around 251% and 71% respectively and this shows that the company has witnessed good results generally in the last 6 years. However, the revenues of X5 and X6 tablets have been sluggish with the last two years witnessing a reduction in revenues on the two tablets. As a result, the profits of the company dipped by a margin of over 30% annually (Siddiqui, 2010).
The worst performance of the company in terms of profits came from the year 2014 when the company witnessed a dip of 67% in profits. Compared to its competitors, the revenues and profits of Clipboard Tablet Company have been dismal in the last two years when major tablet manufacturers saw double digit growth sales and profit margins.
In terms of product offering, the Clipboard tablet company had three products namely X5, X6 and X7 and these tablets were sold at $ 265, $420 and $ 195 respectively and this means that these products were targeted for the low and middle end markets alone. This is in comparison with other competitors who had tablets for the low, middle and high markets retailing at between $ 150 and $ 1,000 (Jones, 2012).
Pricing
The X5, X6 and X7 tablets were priced at $ 265, $420 and $ 195 respectively in the last 6 years. This pricing mode worked for the company until 2014 when the sales figures for the X5 and X7 dipped. As a result, this fixed pricing mode did not work of the company since prices should not remain static but instead it should reflect market fundamentals of production and demand (Thierauf, 2011).
Although, the pricing model of Clipboard Tablet Company might have been based on superiority and popularity of the products, the company should also have considered demand. The price ranges for the tablets adopted by the Clipboard Tablet Company was within one range and thus targeted certain market segment (LaForge, 2010).
Product Development
The Clipboard Tablet Company focussed it sales on three tablets namely X5, X6 and X7 which were developed and launched in different times. The X5 and X6 tablet were launched before 2010 while the X7 tablet was introduced into the market in the year 2011. The company maintained these three models over the 5 year period of 2011 to 2015 yet no new tablets or improved version of the old X5 and X6 tablets were launched.
The R&D allocations of the company in most cases remained static at $ 22 million even though the company witnessed growth in revenues between the periods of 2010 to 2013 (Siddiqui, 2010). As a result, the subsequent years of 2014 and 2015 the sales and popularity of the old X5 and X6 tablets dipped. Furthermore, the company maintained the capacity and development of the products with costs fixed at 33% over the 6 year period.
This means that the company was not interested in developing new products since expenditure remained minimal even though the company made good profits. For instance, when the company started experiencing a dip in revenues and profits no concrete actions were taken on new product development (Jones, 2012).
The company did not abolish or come up with new clone versions of the tablet and thus sales relied upon the popularity of the old versions of X5 and X6 tablets. Therefore, from our analysis on product development little was done in terms of improvement of this department by Joe Schmoe.
Conclusion
Under the tenure of Joe, the Clipboard Tablet Company’s performance soared and dipped at the same time. Joe stuck with a fixed strategy over the last six years, since the company did not expand its product line and at the same time the company spent less on R&D. The technology and communications industry is a fast paced industry with quick changing trends and thus increased expenditure on R&D is very important.
For instance, we witness that in the periods between 2010 and 2013, the X5 and X6 tablet brands had impressive sales and profit margins. However, in the last years these tablets returned poor sales yet their product prices were maintained. Joe should have been strategic in timing and dropped the prices of the X5 and X6 prices by around 20% from the $ 265 and $ 420 which the tablets were retailing.
This move would have netted the company good revenue streams while the company was in the process of launching new products. In the years 2011 and 2012 when the company witnessed high revenues and profits, it would have been wise for the company to launch new tablets that would make competition in the market stiff.
Moreover, due to the sustained demand and good sales of the X7 tablet, the company would have come up with a flexible pricing model that would have seen this tablet sold at premium prices to net the company more revenue (Siddiqui, 2010). The best strategy that would have been adopted by Joe was to sell the X5, X6, and X7 tablets at premium prices when the demand was high and discount new products as a means of attracting new consumers.
Therefore, the company’s performance in terms of finances would have remained positive. Moreover, more allocations should have been done on R&D and product development to make the company’s products competitive in the tablet industry.
References
Jones, J., Heitger, D. & Mowen, M. (2012). Financial Analysis, Planning & Forecasting: Theory and Application. Chicago, IL: John Wiley and Sons.
LaForge, R., Avila, R. & Schwepker, C. (2010). Sales Management: Analysis and Decision Making. New York, NY: Cengage Learning.
Siddiqui, S. (2010). Managerial Economics and Financial Analysis. London: Palgrave Macmillan.
Thierauf, R. (2011). Strategic Analytical Processing Systems for Business. Austin, TX: Routledge.