Video Game Marketing Essay - 825 Words

Game Player Real Action 3D (Essay Sample) Content: Name:Course:Instructor:Date:Game Player Real Action 3DPricing objectives * Growth in market share * Target returnPricing Constraints * Customer ceiling * Break-even pointPossible prices: $400 * $499 * $600Break-Even PointsIt is where the expenses to make the console are equal to the revenue accrued from itFixed costs per unit= $250Variable costs per unit= $ 200Total cost: $450The break-even point is therefore also $450, where no profit or loss will be made.This means that price a. of $400 is below the breakeven point because it is $50 lower than the total cost. Price b. and c. are higher with $49 and $149 respectively.-571500-400050 Break-Even Point (units) = 1 Break-Even Point ($'s) =$500 Break-Even Point ($'s) = $500 Formulas: Total Fixed Costs TFC = $250 BEP (units) = TFC/(SPU-VCU) Variable Cost per Unit VCU = $200.00 BEP ($'s) = BEP (units) * SPU Sales Price per Unit SPU = $400.00 Market-product gridThe market-product grid prepared earlier looks a s followsProducts Current New Markets Current Product development Market penetration New Diversification Market development Modification of the pricesThe main pricing items affecting the price will be the demand, the cost and the competition.The target volume of sales for the first year is 10, 000 units in the Arkansas market. With this it is easier to reach the breakeven point with price c. of $600 units with fewer units, but affect demand. Using the price of $499, it would take longer to manage the break-even point, but it would stabilize the demand.Other factors to consider for the market, the competitor pricesSony's Play station 3 = $400Nintendo's Wii = $249.99Microsoft's XBox = $450Even while considering these prices, it is important to note that the gaming console market has a price inelasticity of demand. The effect of the price, especially considering that this is a seventh generational sixth-sense technology console, should be higher as a matter of economics and stature. The rationale is that the gamer is also after prestige since having a console that can be controlled by full body motion and show the characters in 3D is a new addition.Using the prices considered earlier, and the charts illustrated, it is clear that it would be impossible for the company to make any profits using the $400 price because it is significantly lower than the $450 Total cost for each unit. This means that the company will be incurring a loss of %50 for each unit it sells. The second price would offer a profit of $49, and the last $199, meaning if profit is the motive, then the last one is the most profitable. Since, as indicated in the grid above, the concentration is on market penetration and product development, then it is not prudent to use profit primarily as the driver for the price. Even so, it is significant as a threshold for the price since the company cannot afford to be making losses. One of its competitors, Sony, used such a loss making model to sell PS3, but such costs were cushioned by sales in the earlier versions, and ultimately by the discovery of new technology and cheaper materials. GameD's previous consoles have not reached such a level as to offer a sustainable loss making model, which is why it is important to break even at some point. The possibility of sixth sense technology going down is still abit far off-given that the company bought the patent for it and incorporated a new 3D experience.B.The other factors to consider are the possibiliti...