Cilkray Graphics Harvard Case Study

Cilkray Graphics

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TO: Marcus Crosby

FROM:

RE: Cilkray Graphics - Pricing and Product Development Strategy

DATE: December 5, 2015

Hi Marcus,

Following our meeting, I have come up with a pricing and product development strategy for Cilkray Graphics’ current and future line of products.

Below are my recommendations for the pricing and product development strategy.

* Cilkray must immediately drop price of CP3000 by 20% in US markets to ensure it doesn’t lose market share to its competitors. In the non-US and Europe markets where customer support is valued more than price, Cilkray must allocate 20% of the revenue gained through sales in these segments to customer support and sales services.

* Cilkray must target the Asian markets where XLRush is currently owning a majority of its 43% overall market share in the power segment and sell its new version of CK300 targeted for December release.

* Finally, Cilkray must follow the “Platform Up” option where they launch the improved CK300 by March in markets outside Asia.

Cilkray is currently the leaders in the Power segment, with XLRush being its only major competitor. But the release of GSpeed has altered the entire dynamics of the industry and Cilkray needs to immediately slash the price of CP3000 by 20%. With a gross margin of 44% in the power segment, Cilkray can afford to reduce the price and still earn substantial profits. This recommendation is made keeping in mind the huge growth opportunity in the Power segment and also the importance of not losing out market share to competitors (See Exhibit 1).

Next, Cilkray must start targeting the Asian markets where XLRush has gained huge market share. With higher processing speed and compatibility, Cilkray’s products are better than XLRush’s products. Proper marketing campaigns and better negotiation with channel partners by providing more discounts will secure a significant pie of the Asian market share

(See Exhibit 2).

Finally, Cilkray must...