Nokia PLC (Nokia) continually reviews its product range and enhancing its existing products by developing new models to satisfy the demands of its customers. The company intends to always have products at each stage of the product life cycle to ensure the company’s continued presence in the market. The major brands are the Nokia 6260 Smart-phone and the Nokia 6170.
The Nokia 6260 phone is a high-performance business phone designed for mobile professionals. It offers the latest mobile technology features and applications, including push to talk, email, Bluetooth connectivity and a VGA camera in an innovative fold-design. With the increased competition and technological changes in this market the Nokia 6260’s life is expected to be only two years. Moreover, this competition may force Nokia to reduce the selling price by N$100 which would result in demand increasing by exactly 100 000 Nokia 6260s. Nevertheless, should the new Moto Z Force smartphone fail to enter the Namibian market, the Nokia 6260’s price will be increased by N$150 and demand would fall by 150 000
Nokia intends to price each Nokia 6260 at N$6 000 and sell over 25 000 000 phones per annum
In addition, to the 6260, the company also introduced the Nokia 6170 some time ago. The 6170 is an attractive, clamshell camera phone that combines modern, stainless steel design with a feature set that emphasizes quality of life. The strength of this phone is its flexible messaging options: e-mail, instant messaging, MMS and push to talk all in one handset. The phone is now about to enter the maturity stage of its life cycle which is expected to last for ten weeks. Each phone has a variable cost of N$3 800 and takes 1 standard hour to produce. Nokia is unsure which of four possible prices the company should charge during the next ten weeks. The following table shows the results of some market research into the level of weekly demand at alternative prices:
a, Determine the demand function, where P= a – bx), for the Nokia 6260.
b,Calculate the marginal cost for the manufacture of a Nokia 6260 and the total fixed costs
c,Find the price (P) and the quantity demanded (x) in the demand function by equating the MC to MR (marginal cost to marginal revenue). MR = a -2bx
Leave an answer