Introduction
This case was about the company engaged in the business of information technology, named Info-Technology Research Group. The company was founded in 1997 to fulfill the fundamental need in the market of information technology community, with a view to provide the precious information to the IT professionals who were always keen to have useful information everyday but busy enough to read long reports and thousands of pages produced every day.
To tackle this problem, the management of the Info-Tech Research Group suggested a solution to this problem by a web publication called Info-Tech Advisor (ITA). That was the first ever product developed by the company.
The idea behind the Info-Tech Advisor was to provide a concise advisory service to the organizations with the primary focus on the critical, latest and relevant information for the IT professionals.
Problem Diagnosis
Right after deciding to go with the Info-Tech Advisor web publication technology, the management of the company has also decided to go to another service that focus more on strategic issues facing IT professionals, called the McLean Report with the purpose of filling up the gap between the technology IT professionals and the business via articles and hand tools. However, the success of McLean Report was estimated to be based on the success of ITA.
The company was faced with the problem of deciding the right pricing strategy and number of units based on different price tags. The management of the company wanted to estimate the right price and then based on cost and benefit analysis, decide on the right price.
New Product Analysis
The new product was based on a packaged document. The management and Mr. McLean have decided to develop six different methodology topics. These topics would be provided in the form of books.
Product
The product McLean Report was named after the name of McLean. This product offers various features for the information technology professionals and the decision makers. The management of the company has decided to prepare the McLean Report in the form of a bound book on six different topics.
The book would be helpful in filling up the gap between the IT professional and the business. The book would be consisted on timely articles and hand tools with the step-by-step strategic IT planning process. Through this book, the IT professionals would be able to reanalyze their IT strategic plan that would best fit with their company’s overall business strategy.
Price
The management of the company was considering three different approaches to price its new product. The management has to decide which pricing strategy to be followed in order to get best possible results from the product sales.
The management of the Info-Tech Research Group may have option of market skimming pricing strategy, which states that the price of the product should be set at high prices based on the premium quality of the product and to capture the market of first mover by charging premium prices.
Otherwise, the price would be set at a lower range as compared to the competitors to facilitate all low price target market consumers in order to gain high market share in low time, then gradually increase the price.
On the other hand, economy prices are yet another option available to the management of the company. The fourth option available to the management of the Info-Tech Research Group is to go for market penetration by setting their high quality product’s price slightly lower.
Place
The management of the company has to decide over the distribution pattern of the product, that whether to place its product through wholesale, retailers or use some other channels to market its product.
Promotion
Then the management has to decide that which promotion activity it should choose in order to get best possible results from its product. In this case, the company has three promotion alternatives, Google AdWords, Direct mailing and Magazine advertisement.
Identification of Potential Cash Flows
After analyzing the situation and the estimates made by Mr. McLean and his team management over different prices and different output levels, as shown in the appendices below, the first estimated price of $295 will get the about 250 units to be sold, making around $70,063 as net revenues after deducting the 10% discount....................................
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President and CEO of Info-Tech Research Group is to determine pricing and promotional strategies for the latest line of products. This event allows students to use a differential analysis as a tool to help in their decision. Students must complete a qualitative analysis based on a new line of attack Info-Tech products in a competitive market and its potential customers, identify those elements that are relevant to the decision and to classify them as recurring cash or one-time cash flow, understand that recurring cash flows consist of both variable costs and fixed costs and to understand the differences, identify the elements that are an investment, including working capital accounts, applicable exchange rate, so that all the figures in the analysis are in the same currency, the calculation of return on investment and return relationship; recognize the need to perform a sensitivity analysis and projected sales levels.;, and to decide on the basis of qualitative and quantitative analysis of the "Hide
by Elizabeth M. Grasby Source: Richard Ivey School of Business Foundation 8 pages. Publication Date: Mar 07, 2005. Prod. #: 905B02-PDF-ENG
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