Sales Forecast and Pricing Strategy Impact on Battery Business

https://hbsp.harvard.
edu
Group1081@hbp.edu
Adjunct1#
1. THE ADVANCED SCENARION WILL REQUIRE YOU TO ENTER YEARLY SALE FORECASTS AND YOU
WILL NEED TO PAY CLOSE ATTENTION TO YOUR VARIANCE SO THAT YOU DON’T GET FIRED
2. Use clipboard
Some Insight 1:
1. No research and development due to average project lengths of 4 to 8 years

2. Figure out best pricing strategy
3. Focus on past simulations both individual and group
Focus on reaching market share caps
Still focus on same past and individual strategies to promote sales while taking into consideration:
1. Fixed costs and variable costs

2. Sales variance and price changes
3. Actual sales and forecast sales
Use spreadsheets more than three years of
1. Pricing
2. Sales forecasts
3. Operating profits
Year | Forecast Sales | Actual Sales | Sales Variance | Price | Variable Cost |
Some Insight 2:
1. Conserving the existing business using a steady strategy

2. Perception of business
3. We were consistent with a strategy of process improvement: (improving efficiency and
productivity, reducing costs)
Learning about financial implications of disruptive innovations
1. If you do a bad job you get fired

2. You have to be cognizant of forecasting and what you are consumers are willing to pay
3. When you hit all your target you are successful
My approach:
FACTS:
1. Market pressures on pricing mean that Back Bay Battery never has quite enough R&D money to
spend on everything its research staff would like to do
2. The NASA demonstration of an ultracapacitor-powered drill caught his attention, and the rapid
recharge time for ultracapacitors was very appealing if only the storage capacity was much
larger.
3. Focusing on this customer would consume essentially all of the company’s limited R&D
resources
4. On the one hand, the team gets daily pressure from the sales organization to improve the
company’s NiMH offerings
for in this commodity business, small performance or technical advantages can swing a large
order since pricing is pretty competitive.
The company can “tweak” its demand a bit by adjusting prices, but one always has to be
careful not to lose a big customer in the process
5. It also has to factor in how long it will take for those investments to bear fruit.
6. While some of the scientists wax poetic about the potential of ultracapacitors, the technology
has major shortcomings for Back Bay’s core markets today, and the company has to be careful
not to dig too deep a hole financially
7. The product manager at a major power tools manufacturer, who happens to be one of Back
Bay’s largest customers, has been encouraging the company to focus on its specific needs for an
upcoming refresh of its consumer power tools line
8. The customer is looking for higher power density and lower unit battery costs, as it is
feeling market pressure from Asian competitors as well.
News:
2012 : Overall sales in Power Tools grew by 37% this year to 19.9 million units annually
9th round
2012
Overall sales in Power Tools grew by 37% this year to 19.9 million units annually.
2013
Overall sales in Power Packs grew by 17% this year to 1.4 million units annually.
2014
2015
2016
Power tool customers have discovered that very fast recharges reduce the importance of battery life. When power
tools can be recharged nearly instantly, customers don't need batteries that last several hours. As a consequence,
the desired energy density and importance of energy has dropped while the importance of recharge time has
increased for power tool users.
Competition in the mature power tools market segment has pushed prices down again. Portable power tool makers
are requesting a 6% price reduction in batteries to $8.50 per unit.
Overall sales in Power Tools declined by 22% this year to 15.9 million units annually.
Overall sales in Two Way Radios declined by 5% this year to 5.6 million units annually.
2017
Lithium-ion battery producers are attempting to grow market share in the portable power pack market through
aggressive price reductions. Buyers of portable power packs are now demanding price reductions of 25% to $6.75 for
future orders.
Competition in the mature power tools market segment has pushed prices down still further. Portable power tool
makers are requesting a 12% price reduction in batteries to $7.50 per unit.
Overall sales in Power Packs declined by 28% this year to 1.5 million units annually.
2018
2019
Your research and development team has reported a breakthrough improvement in the months to self discharge of
NiMH batteries.
2020
Congratulations! You have reached the end of the simulation. As of 2020, your cumulative profit is
$128.71M.
KESIMPULAN
1. Harga sangat menentukan
2. Semakin murah semakin banyak pembelian
3. Dipasin sama harga pasar, di murahin dikit
4. Proses improvement dimaksimalkan saja

5. Yang lain tidak berpengaruh
6. Walaupun gak di kasih alokasi tapi tetap naik
7. Jadi alokasikan untuk proses improvement
8. Coba lain kali harganya dimurahin di uc sampai 10
9.
2012 9.5
2013 9.0
2014
2015 9.5 /19.00
Competition in the mature power tools market segment has pushed prices down. Portable power tool makers are
requesting a 10% price reduction in batteries to $9.00 per unit.
Portable power pack customers are placing greater importance on prices from their battery suppliers.
2016 8.5/19.00
Power tool customers have discovered that very fast recharges reduce the importance of battery life. When power
tools can be recharged nearly instantly, customers don't need batteries that last several hours. As a consequence,
the desired energy density and importance of energy has dropped while the importance of recharge time has
increased for power tool users.
Competition in the mature power tools market segment has pushed prices down again. Portable power tool makers
are requesting a 6% price reduction in batteries to $8.50 per unit.
2017 8/ 18.50
Lithium-ion battery producers are attempting to grow market share in the portable power pack market through
aggressive price reductions. Buyers of portable power packs are now demanding price reductions of 25% to $6.75 for
future orders.
Competition in the mature power tools market segment has pushed prices down still further. Portable power tool
makers are requesting a 12% price reduction in batteries to $7.50 per unit.
2018 5/15.00
2019 1/5
overall sales in Power Packs grew by 39% this year to 3.7 million units annually.
Your research and development team has reported a breakthrough improvement in the months to self discharge of
NiMH batteries.
2020 15/25
Congratulations! You have reached the end of the simulation. As of 2020, your cumulative profit is -
$177.96M

Sales Forecast and Pricing Strategy Impact on Battery Business

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https://hbsp.harvard.

1. No research and development due to average project lengths of 4 to 8 years

Focus on reaching market share caps

1. Fixed costs and variable costs

Use spreadsheets more than three years of

1. Conserving the existing business using a steady strategy

Learning about financial implications of disruptive innovations

1. If you do a bad job you get fired

increased for power tool users.

are requesting a 6% price reduction in batteries to $8.50 per unit.

4. Proses improvement dimaksimalkan saja

6. Walaupun gak di kasih alokasi tapi tetap naik

7. Jadi alokasikan untuk proses improvement

8. Coba lain kali harganya dimurahin di uc sampai 10

2015 9.5 /19.00

requesting a 10% price reduction in batteries to $9.00 per unit.

increased for power tool users.

are requesting a 6% price reduction in batteries to $8.50 per unit.

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