Billy Doors, Vice President of Marketing for Qapmoc Computer, Inc., must decide whether to introduce a mid-priced

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Billy Doors, Vice President of Marketing for Qapmoc Computer, Inc., must decide whether to introduce a mid-priced version of the firm's CP2010 minicomputer product line-the CP2010-X minicomputer. The CP2010-X would sell for $2,500, with unit variable costs of $1,450. Projections made by an independent marketing research firm indicate that the CP2010-X would achieve a sales volume of 480,000 units next year, in its first year of commercialization. 30 percent of the first year's volume would come from competitors' minicomputers and market growth. However, a consumer research study indicates that 40 percent of the CP2010-X sales volume would come from the higher-priced CP2010-Deluxe minicomputer, which sells for $6,450 (with unit variable costs of $2,350). Another 30 percent of the CP2010-X sales volume would come from the economy-priced CP2010-Millenium minicomputer, priced at $1,500 (with unit variable costs of $800). The CP2010-Deluxe unit volume is expected at 350,000 units next year, and the CP2010-Millenium is expected to achieve a 500,000 unit sales level. The fixed costs of launching the CP2010-X have been forecast at $2.5 million during its first year on the market. Should Mr. Doors add the CP2010-X model to the line of minicomputers?

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Basic Marketing Research

ISBN: 978-1133188544

8th edition

Authors: Tom J. Brown, Tracy A. Suter, Gilbert A. Churchill

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