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You are to assume the role of marketing manager for an optical lens manufacturer. Your engineers have recently developed a miniature lens suitable for security
You are to assume the role of marketing manager for an optical lens manufacturer. Your engineers have recently developed a miniature lens suitable for security cameras: this lens has a special electricallydriven effect whereby it can switch from an ordinary lens to a fisheye lens, enabling firms to use fewer cameras since one camera can cover a wide area, but can focus in on any suspicious activity. Your market research people have come up with the following research ndings regarding the pricing of the product. Note that the prices are what the customer would be prepared to pay in each case. If the lenses are sold at: Customers would buy: 50c each 50,000 units per annum 75c each 40,000 units per annum 'I each 30,000 units per annum 1.50 each 15,000 units per annum 2.00 each 5,000 units per annum Obviously the bigger the production run, the lower the price to manufacture. Your engineers have come up with the following costings: If we make: 40,000 units 30c each 30,000 units - 40c each 15,000 units 60c each 5,000 units 'l each There is also a one-oftc tooling charge of 8,000 for the special moulding equipment needed to make the lenses. The managing director has said that he wants to see at least a 30% profit {based on turnover) on any new project. He allows two years for a new project to prove itself before he starts asking difficult questions. The finance director wants to see the entire setting up costs amortised over the first year of operations. - Which price(s) will meet the managing director's targets? - Which will meet the finance director's target? - Which price shows the most prot? - What is wrong with the managing director's target? - What pricing strategy would you foliow
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