ECON325 Portfolio Project Template Week 5

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Bryant & Stratton College *

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325

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Economics

Date

Feb 20, 2024

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docx

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Uploaded by BailiffCheetah3184

Tabitha Rodgers Bryant & Stratton College ECON325 - Microeconomics Instructor Cliff Musimenta January 20, 2024

ECON325 Microeconomics Portfolio Project 2 Table of Contents Week 2: Product .................................................................................................................. Market Research ....................................................................................................... Week 3: Pricing .................................................................................................................... Determinants of Supply and Demand ....................................................................... Week 4: Economic Costs ..................................................................................................... Week 5: Explicit/Implicit Costs ............................................................................................. Week 6:Economic Profits ..................................................................................................... Week 7: Overall Assessment .............................................................................................. References ...........................................................................................................................

ECON325 Microeconomics Portfolio Project 3 Week 2: Product and Market Research  Due by the end of Week 2 at 11:59 pm, ET. This week, you will provide an overview of the product you have selected to present to the marketing team. You will also explain how you will conduct the market research for each of the six topics listed.  Identify and describe the product you plan to conduct market research on. Justify your selection by explaining what the current product market looks like.  Explain how you plan to conduct the market research for each of the following: 1. Measure consumer demand 2. Identify Trends 3. Analyze buyer behavior 4. Analyze competitor behavior 5. Identify target markets 6. Determine sales potential Type your response below; you may leave all directions intact: The product I want to explore is an Electronic Vape device designed specifically for Delta-8 THC, Delta-9 THC, and CBD. These products are becoming more popular, and the rate of consumption and demand is growing at a near exponential rate. Recently, several more States in the USA have updated their laws concerning THC, including the State where I live, Missouri. Marijuana is now legal. With these new laws, which only took effect on December 8, 2022, the market for this product just expanded and gaining access to these products will now be easier for those who use recreationally and medically. The day the laws changed you could literally smell the change in the air. Consumers rushed to stores seeking to buy these products legally for the first time in their State, rather than having to travel out of State and risk breaking laws. The target market is vast, as there are users of these products in all age groups, races, political and social classes. Many local vape shops have begun preparations to develop similar products, so there will be a lot of competition and marketing will be important. The important part will be making sure to obey all laws, paying close attention to the new taxes associated with these products, developing a sound product, and creating a loyal customer base. With a loyal customer base, the potential for sales is nearly endless, but I will research data from nearby States/Territories to show the potential for sales in Missouri.

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ECON325 Microeconomics Portfolio Project 4 ECON325 Portfolio Project Grading Rubric Week 2 Product and Market Research Criteria 100 points 80 points 50 points 0 points Product & Market Research Fully described and justified product and market research. Thoroughly supported the plan for the six defined segments. No mechanical errors. Described product and market research. Mentioned the plan for 4-5 defined segments. 3-5 mechanical errors. Selected product and/or mentioned market research. Mentioned the plan for 1-3 defined segments. 5+ mechanical errors. No product selected or mentioned market research. Did not address the plan for any defined segments. Mechanical errors made submission unreadable. Week 3: Pricing  Due by the end of Week 3 at 11:59 pm, ET. The idea behind this week’s assignment is to research where your product fits in the current market and how your price point will affect that market. Using the chart below, to create a broad list of determinates for supply and demand. An example of each (determinates of supply/demand) have been provided to get you started. Next, explain your strategy for pricing your product. Include how the price of your product compares to that of similar products on the market, and why you believe your product will be more successful than the competition. For instance, if the price of a new recently-launched candy bar is lower than a competitor candy bar, will demand or quantity demanded change? Explain and use research to back up your choices. HELPFUL HINT: As you work through the remaining weeks of the project, you will want to keep a close eye on each of the determinates that affect your products’ supply and demand. In the chart below list the determinants that will affect your product. Remember determinates of demand are any factor that creates fluctuations in demand for your product and determinates of supply are any factors that causes your supply to shift. You will find an example of each to start you

ECON325 Microeconomics Portfolio Project 5 off: Determinates of Supply Determinates of Demand 1 Taxes 1 Expectation 2 Price Expectations 2 Income from Buyer 3 Number of Sellers 3 Price of Product 4 Price of resources/materials 4 Price of Competitor Products 5 Technology 5 Popularity Next, explain your strategy for pricing your product in the area below. Include how the price of your product compares to that of similar products on the market, and why you believe your product will be more successful than the competition. For instance, if the price of a new recently-launched candy bar is lower than a competitor candy bar, will demand or quantity demanded change? Explain and use research to back up your choices. Type your strategy below; you may leave all directions intact: I am committed to creating high-quality vaping products that stand out in the market. With the changing laws surrounding this industry, I anticipate a significant increase in both buyers and sellers. Unlike the disposable products that are currently popular, I aim to develop a durable and long-lasting vape. While these disposable options may be cheaply priced, they do not offer longevity, often lasting only a week or less. In contrast, I want to provide my customers with a product that can last for a year or more, while also offering regular modifications and upgrades, like how smartphones are marketed and produced. The vape I currently use aligns with this vision, and it retails for approximately $79.99. Over the past six months, I have only needed to replace a few parts occasionally. I aspire to replicate this reliability in my own vape. Although there are already similar products in the market, I acknowledge that I may be slightly behind the competition. Therefore, I will closely observe the popular products offered by my competitors to ensure that my vape meets the demands of the market. Ideally, I plan to introduce two models to the market, similar to how Apple offers both the iPhone and the Plus version. My vape will have a standard version priced at $99.99 and a mini version priced at $64.99. This

ECON325 Microeconomics Portfolio Project 6 pricing strategy will allow me to cater to different segments within my target market. While many competitors offer disposable vapes that last only a week and sell for around $25-40, the companies that offer lasting products like my vision have price ranges between $89 and $149. There are even a few rare models priced over $300, although they do not sell as frequently. Nonetheless, customers often admire these high-end options, envisioning the luxury of owning one. In my opinion, my pricing strategy is well-positioned in the market. While one of my prices is on par with the competitors, I also offer an option that is more affordable than what they offer. This combination of competitive pricing will enable my business to thrive and effectively meet the increasing demand from customers. ECON325 Portfolio Project Grading Rubric Week 3 Pricing Criteri a 100 points 80 points 50 points 0 points Pricing Fully described and justified product pricing. Presented strong price comparison and supply and demand affect. Research used as required. No mechanical errors. Described product pricing. Discussed price comparison and/or supply and demand affect. No research used as required. 3-5 mechanical errors. Product price given, but no description or justification. Price comparison and/or supply and demand affect missing. No research used as required. 5+ mechanical errors. No price, description, or justification provided. Did not address the supply and demand affect. Mechanical errors made submission unreadable. Week 4: Explicit/Implicit Costs  Due by the end of Week 4 at 11:59 pm, ET. As you learned, explicit cost is known as the company’s out-of-pocket costs (i.e. wages, rent, etc.) and are payments that are actually made. Implicit costs are commonly known as costs that are belonging to the owner of the company (i.e. capital and inventory) and are resources and could already be put toward some other use.

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ECON325 Microeconomics Portfolio Project 7 For this week’s entry, define your product’s explicit and implicit costs. Identify if there are any hurdles that jump out at you. How might you prepare to mitigate these obstacles? Explain and use research to back up your choices. Type your strategy below; you may leave all directions intact: Installing a new showerhead can be a delightful way to enhance your showering experience. If your current shower head is old or covered in scale, cleaning it may not be enough to improve the water flow. By replacing it, you can restore your shower to its former glory. Moreover, the cost of a shower head replacement may surprise you, as it is often more affordable than expected. On average, the installation of a showerhead costs around $77.84 per head, with prices ranging from $46.02 to $109.65. Additionally, the labor and materials required for the installation amount to approximately $149.38 per person, with a range of $80.77 to $217.99. The final cost will depend on factors such as your location, the size of the job, the weather conditions, and the finish options you choose. While a basic shower head can be as inexpensive as $5 to $10, according to Fix data, more aesthetically pleasing options with advanced features like steady flow and temperature control can cost several hundred dollars. If you wish to improve both the appearance and functionality of your bathroom, consider replacing the faucet as well. Alternatively, you could opt for a stain-resistant shower head made of high-quality materials like brushed nickel. These shower heads are not only easy to clean but also add a touch of elegance that complements your bathroom's overall design. The cost of upgrading your shower head is typically affordable, mainly consisting of the price of the shower head itself and the labor involved in its installation. Most plumbers charge between $89 and $149 to install a shower head, and the total cost will depend on the complexity of the job, like other home repair tasks. While the plumber is on-site, you may also consider having them upgrade other fixtures or make additional repairs, which could potentially save you money on plumbing repairs in the long run, allowing you to allocate your funds towards other shower upgrades or home improvements.

ECON325 Microeconomics Portfolio Project 8 ECON325 Portfolio Project Grading Rubric Week 4 Explicit/Implicit Costs Criteria 100 points 80 points 50 points 0 points Explicit/ Implicit Costs Fully identified and defined both explicit and implicit costs. Hurdles identified and correct mitigation opportunities provided. Research used as required. No mechanical errors. Identified and defined either explicit or implicit costs. Hurdles identified but no mitigation opportunities provided. No research used as required. 3-5 mechanical errors. Either explicit or implicit costs given, but no description or justification. No hurdles or mitigation opportunities provided. No research used as required. 5+ mechanical errors. Neither costs provided. Did not address the hurdles. Mechanical errors made submission unreadable. Week 5: Economic Profits  Due by the end of Week 5 at 11:59 pm, ET. Last week, you established your explicit and implicit costs. You will use these costs to establish your economic profits for this week. Remember, your economic profit is the difference between the total opportunity cost of production and the total revenue received by a company. As you work through your product, you will be building a case why your product should be produced. This is important to your project because when the market is at a state of equilibrium then the price and quantity is balanced. Remember to remain realistic; at a higher price point the quantity demanded will be higher, thus supply will be higher. A table and chart are provided to help you visualize how price, quantity supplied, and quantity demand affects each other. The chart is set up so you can record your answers directly within it. Remember that this is only to aid in arriving at your answer, you must submit only this Word Document Portfolio Project Template. Return to Lecture 1 for more information on market equilibrium. You can find examples of a demand and supply scheduling chart on the attached chart and in Lecture 1. We covered how an economic profit or product loss is the revenue seen from the sale of a product and the cost of all input/opportunity costs. The following formula is used: Total Revenues – (Explicit Costs + Implicit Costs) = Economic profit

ECON325 Microeconomics Portfolio Project 9 Calculate your product’s expected economic profit. For total revenues (what you anticipate your product will bring in) use what you anticipate revenue to be for the year 20XX. Use your explicit and implicit calculations from Week 4 to further solve the formula. Finally, explain why this is a solid product that your senior leadership team should select to move forward producing. Type your strategy below; you may leave all directions intact: According to an article published in Bloomberg magazine, video game companies often adopt a strategy of selling hardware at slim profit margins or even at a loss. This approach is driven by the fact that these companies generate substantial profits from the sale of game software and recurring online subscription services. In line with this perspective, Kenichiro Yoshida, the Chief Executive Officer of Sony, emphasizes that the success of the business should be evaluated based on the number of active users rather than the number of hardware units sold. While some members of Sony's games staff advocate for selling the new console at a loss to match Microsoft's price, other executives within the company prefer to prioritize profitability, as was the case with the PS4. During an earnings briefing, Sony's Chief Financial Officer, Hiroki Totoki, stressed the importance of maintaining control over the bill of materials for the PlayStation 5 and ensuring the appropriate number of units are produced during the initial production phase. The estimated total cost of production for a PS5 is approximately $450.00, encompassing both implicit and explicit expenses. Sony is currently willing to sell each unit within a price range of $470.00 to $499.00. Consequently, the economic profit for each PS5 unit is projected to be between $20 and $49. With the console's launch scheduled for the upcoming holiday season, the demand is expected to be exceptionally high, and it is anticipated that the initial release will quickly sell out. If Sony decides to produce 200,000 units, the economic profit could range from 4 million to 9.8 million, depending on the price set for each unit.

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ECON325 Microeconomics Portfolio Project 10 ECON325 Portfolio Project Grading Rubric Week 5 Economic Profits Criteria 100 points 80 points 50 points 0 points Economic Profits Fully and correctly calculated expected economic profit. Strong, fact-based explanation provided for senior leadership team. No mechanical errors. Expected economic profit calculated but did not fully integrate all aspects required. Explanation provided for senior leadership team but needs work. 3-5 mechanical errors. Economic profit not calculated correctly and/or explanation not provided. 5+ mechanical errors. Neither economic profit was calculated, nor explanation provided. Mechanical errors made submission unreadable. Week 6: Overall Assessment  Due by the end of Week 6 at 11:59 pm, ET. This week, you will present your final assessment of your research over the past several weeks. In essay form below, reflect on previous weeks and review what your results were. Explain the strategies you will use during your meeting with senior leadership to ensure you product will be selected for production. Be specific and tell us how you will persuade the team! Make sure to focus on research and the concepts of supply, demand, and price. Type your response below; you may leave all directions intact:

ECON325 Portfolio Project Template Week 5

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