Module 2 - SLPThe External Environment, Internal Profile, and SWOTSimulationWonder Company SimulationSimulationThe Module 2 SLP requires that you continue with the scenario and simulation you began in

Simulation Analysis of Wonder Company

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W1, W2, and W3 Reviews

The Wonder Company deals with manufacturing and selling the tablets. Its goal has been to maximize the cumulative profit for its three kinds of tablet models within a period of 5 years. It had three types of tablets that are depicted by the W1, W2, and W3. In a span of five years, that is from 2012 to 2016, the Wonder Company had Joe Thomas who have the VP of marketing. Based on the strategy he embarked on from 2012 to 2016, it has been evident that he was poor in terms of creativity, no wonder he never changed the Research and Development (R&D) allocations and prices of the three products. In his mind, he was thinking that his overall performance is good and there was no need for changing prices or R&D allocations.

In such 5 years period, different products have been performing differently which affected their sales, performance, profitability, market saturation, etc. In this case, the product will be elaborated independently in a span of five years. Firstly, in 2012 the W1 model better and costly than its competing products and as a result it was performing very well. More so, in 2012 the product W1 has been in the growth phase of the product life cycle due to its good performance against its competing products. In the span of 5 years, the price of the W1 model tablet never changed which as $285. The price was never changed at all because the VP (Joe Thomas) of such days believed the W1 model was performing and there was no need for changing the prices and R&D allocations to be changed. Furthermore, in terms of performance, the W1 model started by growth rate from 2012 to 2013 but from 2013 to 2016 its performance reduced gradually. Secondly, another tablet model manufactured by the company was depicted by W2, and with this product, in 2013 the customers were paying more than its comparable products and as a result, its performance with other products in the same category was encouraging. Most of the possible customers for the W2 model were performing but the customers had not purchased the product. In addition, the W2 model has been in growth rate by 2013 which continued to increase as the time was going, that is, in 2012 its performance was 1.024217 and end of the five-year plan (2016), its performance was at 1.706266. In terms of the prices, the price of the W2 model was constant because it never changed from $439 in a span of five years period. The third product model was depicted by W3. Its price was $185 which remained constant from 2012 to 2016. Additionally, in terms of performance, it has been decreasing gradually from 0.97 to 0.84 by end of the five-year period.

Financial Reviews

In the span of the five-year period, different products have been showing different performances and financial analysis it typically considered based the products’ sales, revenue and profit generated, costs, unit margin, costs, etc. (Revelli & Viviani, 2015). The first consideration is the sales of three products. The W1 product sales increased gradually from 2012 to 2014 but from 2015 to 2016, they decreased. More so, when the revenue of W1 product is considered, the revenue increased from 2012 to 2014 but in 2015 to 2016, the revenue generated decreased gradually. On the other hand, based on the sales and revenues made and changes that were felt, affected the amount of profit that was received. The profit increased gradually from 2012 t0 2014 but from 2015 to 2016 it decreased gradually. Amount of profit for a W1 product will be shown clearly in the graph.

In addition, the W2 product has been changing because of different sales, revenues, and profits. Firstly, the sales of the W2 product’s sales increased from 2102 to 2014 and from 2015 to 2016 they decreased gradually. In a span of five-year period, the W1 showed poor performance which is evident from the volume of sales and its pattern. In the first three years the product was in the growth cycle but in the last 2 years, the W1 product moved from the growth phase to a declining phase. More so, the revenue of the W2 product increased from 2012 to 2013 but from 204 to 2016 the revenue decreased gradually showing retrogressive performance. From the profit perspective, the profit of W2 started increasing gradually from 2012 to 2014, and in 2015 it remained stagnant but it 2016 is reduced by a big margin, that is, from 33% to 26%.

The W3 product by 2012 has no sales, revenue, and profit. Later in 2013, the W2 product was old and this led to a gradual increase in sales from 2012 to 2016, and this depicted that the product is in its growth phase because its profit sales increased from 0 to 450,850 within 5 years period. In short, it the only product which has an uptrend in its sales, revenues, and profit that was earned. To sum up, the only the W3 which experienced a growth rate within 5 years, unlike W2 and W1 which started by growth rate but later started declining at the end of the 5-year period.

Market Review

The different products or models have been performing differently in their target markets. According to Belhomme et al., (2016), the market analysis of the product is typically assessed in terms of the repeat sales, new sales, market sales, and first-time customers to figure out how the products are performing. In terms of installed base, all the products increased they're installed based from 2012 to 2016. Thus, the number of units for every product increased yearly. Furthermore, when the number of remaining customers is considered for the product W1, they decreased gradually from 2012 to 2016. At 2012, the number of remaining customers was 6,000,000 but by 2016 the remaining customers were 503,213. This trend shows that the W1 was not performing well and it is in the declining phase of the product life cycle. More so, when the remaining customers for W2 were considered, they decreased from 6,000,000 to 0 showing the product has already been sold out because its market saturation by end 2016 was 100%. On the side of the product W3, its remaining customers was increasing gradually from 2012 to 2016. This showed that the product is experiencing a growth rate. More so, in terms of the first-time customers, the W1 increased its first-time customers from 2012 to 2014 but from 2015 to 2016 the number decreased. In addition, in W2, the number of first-time customers grew from 2012 to 2014 but from 2015 to 2016 it decreased to 0. More so, the W2 market saturation grew aggressively because it increased by 8% to 100%. In W3, the number increased from 0 to 383,338 from 2012 to 2016 respectively. Additionally, it is market saturation was not aggressive since it grew from 2% to 5% in the 5-year period. Lastly, in terms of repeated sales, all products’ repeat sales that is W1, W2, and W3 were increasing gradually. Therefore, all products were able to increase their repeat sales.

Alternative Strategies

Based on the performance of the three models, all started at the growth phase in the product life cycle. Among the three products models, only W3 continued with the progressive models in the span of five-year period unlike another product model that is W2 and W3, that was a growth phase in the year 2012 to 2014 but from 2016 to 2016 they started declining, and therefore, they were positioned in the declining phase of the product life cycle, that shows poor performance of the product (Stark, 2015). Therefore, based on outcomes of the decisions, that were made by Joe Thomas, it evidently showed the reasons behind the poor performance of the product W1 and W2. If I were the VP of marking between 2012 to 2016, I would have set different prices and R&D allocations starting from 2014 to 2016 since that is when the performance of the products started changing and based on the changes that were experienced terms of competition and added features of the product. The reasons behind why I would have started changing decisions in 2014 on all products is because by 2013 all products were performing well when compared with other similar products. By 2014, all the products were in the growth phase, and their performance was favorable in comparison to different products within the same category.

Firstly, the product W1 in 2014 has been in the shakeout phase of the product lifecycle then there is a need investing heavily on the R&D allocations for the sake of increasing funds for the research and development. When the research fund is increased, the marketing and research team will be in a position to know what customers or target markets need for the sake of knowing the changes that should be adopted and implemented to make the product enjoy the competitive advantage in the market (Hou et al., 2017). Additionally, since 2014 seemed to be the year when the source of problem for the W1 product, and therefore, the W1 R&D allocation should be increased from 30% to 36% as well as increasing the R&D allocation for the W2 42% to 45% while decreasing R&D allocation for W3 from 28% to 19% by 2015 for the sake of researching more information regarding the needs of the customers to help in making all the products remain competitive among their comparable products. On the side of the W1 price, it could have been increased slightly because of added features but should be such expensive compared to the similar products. An increase in R&D allocation can play the role of adding unique features on the W1 products to help it in increasing sales because of its unique quality and features (Stark, 2015).

Lastly, by 2016, I would have changed the prices for all products by increasing them slightly at the R & D allocations set in 2015 because the products could have improved in terms of quality as well as attracting many first-time customers and retaining the customers. In my case, I would increase the R&D allocations first before changing the prices in 2015, and after the products’ quality have improved due to added unique features, later in 2016 I would have incremented the prices slightly because the customers would have felt the worth of improved products, and it can be hard for one to complain about the prices that one will be charged since it will directly proportional to the quality of the products.

References

Belhomme, R., Trotignon, M., Jover, R., & Glorieux, L. (2016, April). Market design analysis and role modeling: methodology and first results. In Energy Conference (ENERGYCON), 2016 IEEE International (pp. 1-6). IEEE. (

Hou, R., Wu, J., & Du, H. S. (2017). Customer social network affects marketing strategy: A simulation analysis based on the competitive diffusion model. Physica A: Statistical Mechanics and its Applications, 469, 644-653.

Revelli, C., & Viviani, J. L. (2015). Financial performance of socially responsible investing (SRI): what have we learned? A meta‐analysis. Business Ethics: A European Review, 24(2), 158-185.

Stark, J. (2015). Product lifecycle management. Product Lifecycle Management (Volume 1) (pp. 1-29). Springer, Cham.

Appendices

Prices

Performance

Financial Reviews Tables

Market Reviews Tables