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BBDT3I93 PRICING STRATEGY EECTION d {40 marks} Answer ONE (1) compulsory case study question. Question 1 Garmin Launches New Smartwatches No one said you cannot get luxury with tnction on your watches and Gamiin is out to show that with its newly launched GPS spans watches - the Fenix 5 series. Arriving in five models. with two of them being Sapphire glass variants, the new 5mm watch series should cater to all sorts of needs. Originally a maker of GPS navigator-receivers, Garmin has been developing GPS-capebie smart watches for a few years now. in the era before iPhone 1 (before 200? and the smartphones}, Garmin was well known and was the king of car navigation systems with its comprehensive GPS maps. It has the highest market share of car navigation systems in Malaysia. Even with the entry of the rst and second generation smartphones, Garmin. did not have major competitors. The Garrnin navigation systems were being retalied at between RML200 and RMl and at that time was considered expensive. Google map was introduced during the second generation smartphones with GPS chips but suffers from inaccuracies and no voice guidance as compared with Gannin devices. Garmin's market share begun a major decline when the second generation Googie map was introduced with voice guidance and Garmin begun a fall that they never recovered when the third generation smartphones was introduced together with a more accurate Google map and the introduction of Wane. Garmin's competitive advantage was in its GPS technology and begun to venture into the smart watch market. its Penis 5 series is designed for active people like athletes or sports enthusiasts. The watches are mainly divided by size . the Ferris SS for smaller wrist sizes, Ferris 5 for a more regular size, and the Fenix 5X for those who want something bigger. All models Feature stainless steel bezels, buttons and back casing. which makes them tough enough to withstand the rigours of even extreme sports. The Penix 55 was made for the ladies or those with more e'eminate testes. it's sleeker, lighter, and overall a smaller device than the other models. This model comes with a chic design and is available in silver with a white band, or a Sapphire glass version with a black body and black band called the Fania 58 Sapphire. On the other side of the size spectrum is the Fenix 5X, a large Slmm watch that comes equipped with topographic (TOPO) mapping, round-able cycling maps, and additional advanced navigation features such as Round Trip Run and Round Trip Table. It also has the Around Me feature that will show you nearby spots of interest, which can be useful for travelers or when you're in an unfamiliar place in town. This model has scratch-resistant Sapphire glass. Finally, there's the Fania 5, the standard version. It's designed to look like a regular watch. but has all but the fix-exclusive features to the Fenix 5 series. This includes a bright, high resolution display that can be seen under sunlight, the Garmin Elevate heart rate sensor, GPSFGLONASS compatibility, and more. All of the new smart watches are built to resist the elements to a certain extent, with it being able to go into the water for up to 100 metres. They also have long battery lives of anywhere from 13 to 20 hours in GPS mode, or nine clays to two weeks when used normaliy as a smart watch. Of the bunch, the Fenix SS has the weakest battery while the Fenix 5 has the best. The ve models are now available for purchase in Malaysia, with the Fenix 5 and ES both priced at RM2,399, while the Sapphire variants For the two will retail at RM3,149. As for the Fenix x, it will cost a hefty RM3,399. The retail prices include the 6% GST. This question paper consists of 5 questions on 4 printed pages. 3 BBDT3193 PRICING STRATEGY Question 1 (continued) Garmin retails the Fenix series through specialist watch shops. As the Fenix watches are positioned for the athletes or sports enthusiasts, Garmin expects low volumes and hence gives their retailers a commission of 40% of the net retail price for each watch sold. Garmin Malaysia expects to sell 30,000 units for the initial first year with Fenix 5 and 5S making up 50% of the units, Sapphire variants making up 30% of the sales, and Fenix 5X comprising 20% of total sales. Garmin Malaysia expects their gross margin across all the models to average 35% of sales. Fixed costs including advertising and overheads is budgeted to be RM5,000,000 for the year and is proportioned as RM2,500,000 for the Fenix 5 and 5S, RM1,500,000 for the Sapphire variants and RM1,000,000 for the Fenix 5X. Source: Adapted and modified from CHIPS, 2017, "Garmin Launches New Smartwatches", May 2017, pp. 28. Required: (a) Discuss the segmentation and positioning of the Garmin Fenix smartwatches. (10 marks) (b ) Based on the Product Life Cycle, is Garmin Malaysia using the right pricing strategy for its Fenix smartwatches? (10 marks)