CASE 3 LUNA ELECTRONICS B 1 LUNA ELECTRONICS (B) Luna Electronics is an established firm that sells primarily through its catalog operation, though...

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Luna Electronics is an established firm that sells primarily through its catalog operation, though it does have a small cadre of retail stores. In this regard it has some similarities to the better known Sharper Image operation. Luna has recently produced a potential new product that it calls the “Holographic Imaging Televiewer (HIT).” The HIT can be connected to any standard color television, and project a three-dimensional image not unlike 3-D movies of a few decades ago, but without any need for special glasses or other viewer connected paraphernalia. The screen resolution of the HIT greatly exceeds anything out in today’s market that is suitable for an individual television set. The procedure for connecting the HIT to the television is very simple, involving a similar process to that of installing a VCR or DVD player.   Luna is very excited about this new product, for it was quickly established by the manufacturing division that the HIT can be produced in reasonable quantities, and that it can be sold very profitably. Luna’s management believes that there is an enormous market for the HIT, reasonably priced for any household with an income of more than $60,000. However, Luna’s management believes that it may be key to capture the market as soon as possible, before Luna’s competitors developed a similar product. This is a significant possibility, since the basic technology is sufficiently in the public domain, not allowing Luna to patent it in a way that could withstand competition.