PD200 Professional Communications
New Product Business Proposal
This business proposal targets a new market for a personal assistant computer device for senior citizens. This is a hand held mini-device that is voice activated and records details such as doctor appointment, medication memo, a push button to call the police or ambulance service in the event of an emergency. Currently as we move into this modern day and age where everything is computerized, the needs of the elderly, especially those who lives alone should be prioritized at all time. Currently, there is no offering of such products that offers security as well as a peace of mind. Hand held devices of such are an elastic product and operates in a free competition market structure.
How Revenue will be Increased? During the first initial offering of this device, a special promotional pricing will take place, which would allow customers to obtain this device at a reduce cost. The sales team will be offered an incentive based on who is able to achieve the sales target. This will push them to increase the target sales. Awareness would be made in hospitals and doctor offices and places frequent by this market and a referral commission can be given to these places.
How will you determine the profit-maximizing quantity?
The MR and MC will help the firm in deciding how much to produce. This is determined by any increase in output would bring in additional revenues than it would cost to produce. That is, MR > MC. It would be more beneficial for the company to produce at this unit because in doing so will result in more benefits than cost.The goal for start-up production is to manufacture cheaply and avoid surplus. Production quantity is not known at this time but when determined will be the initial working number to begin production and to estimate labor and variable costs. Figure 1 depicts a potential ATC curve for determining initial quantity and price.
p* -------------------------------.- D q* q MR
Figure 1. The above figure shows at what point the MC=MR, therefore the firm will be able to determine at what point above that they can maximize quantity and profit.
How could you use the concepts of marginal cost and marginal revenue to maximize profit? What information do you need to determine this? Without this information, how would you make a decision?
The company will be able to develop reliable marginal cost (MC) and marginal revenue (MR) charts after the first month of production. The company can make opportunity cost decisions on whether to adjust quantities to achieve maximum profit at MR=MC. Growth in output may also be met by efficiencies and an increase in the company’s production possibilities curve. Production of these devices can be adjusted in the short-run, however; the company’s vision is to ship the same day as the order is received. Production costs are low which, will limit total costs. The production strategy is to create an efficient system using proven but lower cost components. Expensive, ultra-modern technology is not required to meet consumer demand in this segment. Software packages will be smaller and less expensive. The company does not intend to take a loss for the purpose of establishing the brand with seniors. The success of this marketing approach will be evident after the first year of production. If the device is successful however, the company can adjust production in the long-run. 75 million Boomers will turn