Info-Tech Research Group Harvard Case Solution & Analysis

After calculating the relevant cash flows associated with each of the price alternatives, we then analyze the incremental cash inflows and outflows associated with each of the pricing product based on the first price alternative. As a result of this, the pricing option which was generating maximum net inflows was now generating low incremental cost and benefit analysis as compared to the other pricier alternative.

return on investment and Payback Period

Then we have to analyze return on investment on each of the pricing alternatives. Since, the 1^st pricing option will generate negative cash flows, and then its ROI will also be negative. In the cases of 2^nd and 3^rd pricing options, the ROI will be 41.48% and 69.62%. In the case of incremental analysis, the ROI will be 174.40% and 28.13% respectively.

Furthermore, we have to analyze the period in which all the investment will be covered. In the case of potential cash flows, we came to know that the 2^nd and 3^rd pricing alternatives have their respective payback periods of 2.4 and 1.4 years, whereas, the first pricing option will be generating net outflows and after that there be will no payback period.

Similarly, in the case of the incremental cost and benefit analysis, the payback periods of 2^nd and 3^rd pricing strategies would be 0.58 and 3.55 years respectively. Refer to the appendices.

Goal of One Year Payback

The goal of one year payback seems quite reasonable since the pricing strategies and alternatives provide reasonable inflows at the end of the 1^st year of the proposed project. If we talk about the net cash flows approach to the pricing strategy, the price tag of $995 will generate good inflows subject to the units sold and will provide 1.4 years. This can be improved by slightly cutting the price and improving the units sold.

On the other hand, if we talk about the incremental cost and benefit analysis, the price tag of $495 will be able to cover the investment within the time period of one year, and it will also be subject to the units sold in one year.

Recommendation

After analyzing all the scenarios and estimations presented in the case study and based on our analysis, we would like to recommend that the pricing strategy to be followed should be compatible with the performance of the company in recent years and the image of the company in the customers’ minds.

After the careful analysis on the costs and benefits associated with the product, we suggested that the Info-Tech Research Group should proceed with the new product proposed, subject to proper and carefully evaluated pricing strategy.

Based on the assumption that the Info-tech Research Company is known as the first mover in the information technology industry, we suggest that the company should go for the premium pricing strategy, i.e. Skimming Prices in order to grab the market of the consumers who do not compromise over the quality of the product. For this reason, we would suggest the price tag of $995, but subject to proper utilization of the marketing budget and units sold.

In the case of recommended marketing strategy, the management of the Info-Tech Research Group Company should consider the mentioned factors for analyzing the marketing plans and strategy. The management of the Info-Tech Research Group should complete its target customer analysis before deciding over the market strategy, regarding who will be the most addressed consumer of this new product.

After getting knowledge of the target consumers, the management of the company should perform market analysis as to which class of the market the company would be addressing. The next step after the market analysis is competitive analysis, which means that the company should have knowledge of the current market situation, their competitors, the strength and weakness of the their competitors, the ability of their competitors to respond to any change the Info-Tech would bring and strengths and weaknesses of their own company as compared to the industry in which they are dealing.

After the proper evaluation of the competitor analysis, the next step would be to decide over the medium for marketing and promotions. As in this case, the Info-Tech Research Group has three different options available for their target marketing plan. The management was considering going with the Google AdWords ^TM technology to market its product.

In this campaign, the management of the company would choose various keywords that would lead the customer or the user to the company’s advertisement and hence, the company would only pay in case of a click over its advertisement. However, for this option the management of the company would require a reasonable budget every month.................................

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