Input Prices and R&D Allocations Analysis for Tablet Development Corp Research Paper

Input Prices and R&D Allocations Analysis for Tablet Development Corp - Research Paper Example However, there are major drawbacks in the existing price and R&D budget allocation strategies that have undermined the new product development cycle in the organization. In order to bring a revolution in the existing business practices of the company, it is important that a new pricing strategy is devised that is based on the strategic objectives of each product individually. Furthermore, the decisions for the allocation of funds for the Research & Development (R&D) of each product should be taken individually and on annual basis to achieve the desired objectives of the product and the company. 1.1 Aim The aim of this report is to discuss the new pricing and R&D allocation strategy for the core products X5, X6 and X7 and to reflect on the subsequent performance of each product in response. 1.2 Objectives To study the new pricing decisions and R&D budget allocations for each core product, namely: X5, X6 and X7 taken in 4 years (i.e. from 2012-2015). To analyse the subsequent performan ce and life cycles of each product due to the difference in the decisions. To review the financial performance of each product and their impact on the market factor like consumers and market saturation. To conclude with the explicit difference in performance and the rationale behind the total score achieved. 2 Development of Pricing and R&D Allocation Strategy 2.1 Pricing Strategy The pricing strategy is largely used as the competitive force for the companies to achieve maximum market share in a particular marketplace. For instance, Apple Inc. uses the low-pricing strategy along with its innovative product catalogue to attract largest customer share of the global marketplace. In the study conducted in 2010, Blevins, Cunningham, Ivanova, Koke and Sullivan (2010) found that Apple Inc. has adopted an international price distribution strategy to achieve competitive advantage over its competitors; mainly the Microsoft. In this regard, it has a separate price strategy for each region whic h is consolidated and central in nature. Likewise, Tablet Development Corp.’s largest competitors are Acer, Apple, Samsung and Microsoft that are involved in the production and manufacturing of tablet computers and applications. In order to enter into the established marketplace, Tablet Development Corp. has to undertake the penetration pricing strategy. A penetration pricing strategy is used when the company has to enter into an established marketplace and to attract the market in a substantial manner through low-pricing techniques. After a while, the prices of the product are gradually increased with a strong focus on the product performance that is measured through the customer base and sales volume of each year. In the year 2012, the price of product X5 was set at the lowest possible price of $180 and it was increased by $5 every year. Similarly, the price of X6 was set at $300 only and was increased by $10 each year. The price of X7 was kept at $50 and is increased by $1 0 each year (See Annex 1). 2.2 R&D Budget Allocation Strategy Wind (1990) postulated that there are four purposes of R&D investment, namely: (1) Support and enhancement of existing products and services, (2) Line extension of existing products and services, (3) Discover new products and markets, and (4) Develop new products and services and market portfolios. The first two R&D activities are integral to keep the existing product catalogue of the company operational and thriving. This is a compulsory investment which varies