Henegar Module Two SLP Assignment ACC 501

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School

Central Washington University *

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501

Subject

Information Systems

Date

Jan 9, 2024

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pptx

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Uploaded by lilianasundsmo

NEW PRODUCT: LUMINASYNC SMARTDESK Company: SynthWork Dynamics Liliana Henegar *This is information and description of a fictitious product.

LUMINASYNC SMARTDESK At SynthWork Dynamics, we are thrilled to unveil our latest innovation, the LuminaSync SmartDesk, a cutting-edge smart desk designed to redefine your workspace experience. The LuminaSync SmartDesk seamlessly blends ergonomic design with intelligent technology to create an environment that promotes productivity, health, and overall well-being.

PRODUCT FEATURES The LuminaSync SmartDesk comes equipped with advanced adaptive height adjustment technology. It intelligently senses your preferred sitting and standing positions, automatically adjusting to your optimal working height. This feature ensures a comfortable and ergonomic workspace, reducing the risk of prolonged sitting-related health issues. Tired of dealing with tangled cables? The LuminaSync SmartDesk features a built-in wireless charging pad compatible with all Qi- enabled devices. Keep your smartphones, tablets, and other gadgets charged and within arm's reach without the hassle of cables. Stay connected effortlessly with the integrated connectivity hub. The LuminaSync SmartDesk offers USB ports, HDMI connections, and wireless connectivity options, allowing you to seamlessly connect and charge multiple devices simultaneously. Boost your mood and enhance focus with customizable ambient lighting. The LuminaSync SmartDesk features integrated LED lights that can be adjusted to various colors and intensities, providing the perfect illumination for any task. Prioritize your well-being with health tracker integration. Connect your fitness tracker to the LuminaSync app to receive personalized reminders for breaks, hydration, and posture corrections, promoting a healthier and more active work routine. Meet Lumi, your AI-powered productivity assistant. Lumi understands your work patterns, suggests task prioritization, and even provides weather and traffic updates to help you plan your day efficiently.

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COST ESTIMATES Materials: The LuminaSync SmartDesk is crafted from high-quality materials, including precision-engineered steel for the adjustable frame, tempered glass for the work surface, and durable polymers for the integrated components. Material costs are estimated at $200 per unit. Technology Components: The advanced adaptive height adjustment system, wireless charging pad, connectivity hub, ambient lighting, and AI-powered productivity assistant contribute to the technological marvel of the LuminaSync SmartDesk. The technology components are estimated at $300 per unit. Labor: Skilled labor is required for the assembly of the LuminaSync SmartDesk, including the installation of the adaptive height adjustment system, wiring for connectivity features, and quality checks. Labor costs are estimated at $100 per unit. Research and Development: The extensive research and development investments made to create a seamless integration of technology and design, including user experience testing and AI development, contribute to an additional cost of $150 per unit. Total Cost Estimate Per Unit: $750.00

PRICING SUGGESTIONS • Similar smart desks in the market are priced in the range of $800 to $1200. We aim to position the LuminaSync SmartDesk competitively while offering additional features and superior technology at a more accessible price point. • The LuminaSync SmartDesk offers a unique combination of ergonomic design, intelligent features, and health-focused integrations. The perceived value of such a versatile and cutting-edge product supports a pricing strategy that reflects the benefits it brings to the user. • Our target customers include professionals who value a dynamic and health-conscious workspace, tech enthusiasts who appreciate the integration of smart technology, and businesses looking to enhance employee well-being and productivity. Understanding the willingness of these segments to invest in an advanced workspace solution guides our pricing approach.

PRICING RECOMMENDATIONS • Considering the cost estimate per unit and the market analysis, we recommend a competitive pricing strategy: • - **Manufacturing Cost per Unit: $750** • - **Selling Price per Unit: $999** • This pricing structure allows for a healthy profit margin while providing customers with a compelling value proposition. Additionally, potential promotional bundles, such as discounts for bulk purchases or special introductory offers, can be explored to drive initial market penetration and increase brand visibility. • With an assuming 20% annual growth in sales and production efficiency improvements, the potential profit for the desk could increase over time. In the first year with 1,000 units sold, the profit could equal up to $249,000. The LuminaSync SmartDesk is not just a desk; it's a holistic solution for modern workspaces. Its innovative features, coupled with a carefully crafted pricing strategy, position it as a game-changer in the smart furniture industry, promising to transform the way people work and interact with their environment.

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WHAT ABOUT SPECIAL PRICING FOR SOME MARKETS OR CUSTOMERS? • Offering special pricing for specific markets or customer segments provides several benefits. Firstly, it can stimulate demand within targeted demographics, encouraging more purchases. Secondly, it helps build loyalty among those customers, fostering long-term relationships. • Special pricing can also differentiate the product, creating a competitive edge in the market. Additionally, it allows businesses to optimize their pricing strategy based on varying market conditions and customer preferences, ultimately contributing to increased sales and customer satisfaction ( Indeed Editorial Team, 2022) .

F I V E -Y E A R P L A N I N O U R F I V E -Y E A R C U S T O M E R P R O F I TA B I L I T Y P L A N F O R T H E L U M I N A S Y N C S M A R T D E S K , O F F E R I N G A C O N S I S T E N T 1 0 % D I S C O U N T O N T H E $ 9 9 9 I T E M P R O V E S T O B E A S T R AT E G I C M O V E . Year 1: The initial discount sparks interest, leading to a higher acquisition rate. We anticipate a 15% increase in sales, and while the discount slightly impacts profitability, the goal is to establish a solid customer base. Year 1: The initial discount sparks interest, leading to a higher acquisition rate. We anticipate a 15% increase in sales, and while the discount slightly impacts profitability, the goal is to establish a solid customer base. Year 2: Customer retention efforts kick in, and we project a 10% growth in repeat purchases. The cumulative effect begins to offset the initial discount, contributing positively to profitability. Year 2: Customer retention efforts kick in, and we project a 10% growth in repeat purchases. The cumulative effect begins to offset the initial discount, contributing positively to profitability. Year 3: Leveraging customer loyalty, we introduce complementary products and services, resulting in a 20% increase in average transaction value. Upselling initiatives aim to counterbalance the discount's impact on margins. Year 3: Leveraging customer loyalty, we introduce complementary products and services, resulting in a 20% increase in average transaction value. Upselling initiatives aim to counterbalance the discount's impact on margins. Year 4: As the customer base stabilizes, the 10% discount becomes a key factor in maintaining customer loyalty. Operating costs are optimized, and profitability continues to grow steadily. Year 4: As the customer base stabilizes, the 10% discount becomes a key factor in maintaining customer loyalty. Operating costs are optimized, and profitability continues to grow steadily. Year 5: With a well-established brand and loyal customer following, the focus shifts to premium offerings and personalized experiences. Profitability sees a significant boost, exceeding initial projections. Year 5: With a well-established brand and loyal customer following, the focus shifts to premium offerings and personalized experiences. Profitability sees a significant boost, exceeding initial projections.

L E T ' S B R EA K DOWN T H E E F F EC TS O N R E VE N U E A N D P RO F ITA B ILI T Y E A C H Y EAR BA S E D O N T HE STAT E D A S S U MPT I O N S A N D A $ 9 9 9 P R O DU C T P R IC E : Y E ARS 1 - 3 Year 1: • Revenue: A 15% increase in sales means additional revenue. Assuming the 10% discount applies to all sales, the effective average selling price becomes $899.10 ($999 - 10%). • Profitability: While the discount impacts the profit margin, the increased sales volume contributes to overall profitability. Year 2: • Revenue: A 10% growth in repeat purchases builds on the previous year's customer base. The effective average selling price remains $899.10, and revenue grows further. • Profitability: As customer retention efforts kick in, the cumulative effect starts to offset the initial discount, leading to improved profitability. Year 3: • Revenue: A 20% increase in average transaction value results in a higher effective selling price, contributing to increased revenue. • Profitability: Despite the introduction of complementary products and services, the upselling initiatives help maintain or even improve profitability ( Gillen, 2023).

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LET'S BREAK DOWN THE EFFECTS ON REVENUE AND PROFITABILITY EACH YEAR BASED ON THE STATED ASSUMPTIONS AND A $999 PRODUCT PRICE: YEARS 4-5 Year 4: • Revenue: The stabilized customer base continues to generate sales at the $899.10 effective price, contributing to steady revenue. • Profitability: Operating cost optimization helps improve profitability, even with the ongoing 10% discount. Year 5: • Revenue: The focus on premium offerings and personalized experiences leads to a significant boost in revenue, assuming higher-priced products are introduced. • Profitability: The strategic shift towards premium offerings may further improve profitability, surpassing initial projections. • In summary, while the 10% discount has a consistent impact on the effective average selling price, the strategic approach aims to mitigate this impact by focusing on volume, customer retention, upselling, and eventually introducing premium products for sustained revenue and profitability growth ( Gillen, 2023).

ADVANTAGES ( W H I T E , 2 0 2 3 ) Increased Sales Volume: The 10% discount in the first year attracts more customers, resulting in a higher sales volume, which positively impacts revenue. Customer Loyalty: The ongoing discount contributes to customer retention, fostering loyalty over the years and potentially increasing customer lifetime value. Upselling Opportunities: The introduction of complementary products and services creates opportunities for upselling, leading to higher average transaction values and increased revenue. Brand Establishment: The focus on premium offerings and personalized experiences in Year 5 helps establish the brand as a leader in the market, potentially attracting high-value customers. Competitive Edge: The strategic pricing approach may give the company a competitive edge, attracting budget-conscious customers without compromising the brand's perceived value.

DISADVANTAGES AND FINANCIAL CONSIDERATIONS • Disadvantages: - Impact on Profit Margins: The 10% discount affects profit margins throughout the five years, especially in the early stages when customer acquisition is a priority. - Cost of Complementary Products: Introducing complementary products and services may increase operational costs, potentially impacting overall profitability. - Dependency on Discounts: The long-term reliance on the 10% discount might condition customers to expect continual promotions, making it challenging to revert to regular pricing. - Market Perception: Constant discounting may impact the perceived value of the product, potentially positioning it as a budget option rather than a premium solution. - Risk of Premium Shift: Shifting focus to premium offerings in Year 5 carries the risk of alienating budget-conscious customers who were attracted by the initial discount strategy. • Non-Financial Considerations: -Brand Image: The brand's image could benefit from a strategy that emphasizes customer value and loyalty through discounts or be challenged if perceived as consistently discount-driven. -Customer Satisfaction: If the discounted price aligns with customer expectations, it could lead to higher satisfaction. However, dissatisfaction may arise if discounts are suddenly reduced. -Innovation and Differentiation: Introducing complementary products and premium offerings demonstrates innovation and differentiation, potentially strengthening the brand in the market. -Employee Morale: Ongoing discounts might impact employees if they perceive the company as devaluing its products, potentially affecting morale and motivation. (White, 2023).

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SOURCES • BDC. The Five Most Common Pricing Strategies.Bdc. https://www.bdc.ca/en/articles-tools/marketing-sales-export/marketing/pricing-5-common- strategies • Gartenstein, D. (2018). Advantages and Disadvantages of Pricing Strategies. Small Business: Chron. https://smallbusiness.chron.com/advantages-disadvantages-pricing-strategies- 22271.html • Gillen, C. (2023). 15 pricing strategies and how to Set Yours. Zapier. https://zapier.com/blog/pricing-strategy/ • Indeed Editorial Team (2022) 14 Pros and Cons of Promotional Pricing To Consider. Indeed. From: https://www.indeed.com/career-advice/career-development/promotional-pricing-pros-and-cons • Laja, P. (2023). Pricing Experiments To Accelerate Growth: Mastering 4 Pricing Strategies. https://cxl.com/blog/product-pricing-strategies-and-techniques/ • White, R. (2023). The Advantages And Disadvantages Of Discounts. Omnisend. https://www.omnisend.com/blog/the-advantages-and-disadvantages-of-discounts/

Henegar Module Two SLP Assignment ACC 501

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