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Launch new product?
(High-speed train system)
H: seems like good idea,…
Launch new product?
(High-speed train system)
H: seems like good idea, but need to do further analysis...
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RECOMMENDATION
Launch low-cost bus service
- Gross Profit > target
- Good demand
- Mkt shifting
RISKS:
- cannibalization
- high fuel costs
- difficult to differentiate (hard to compete; could lead to price war)
- late entrant (harder to capture mkt share)
NS:
- analyze further --> who to target?
- differentiation -- how?
- surveys -- get feedback on actual demand, how much mkt share can be captured?
clarifying Qs:
"any specific financial goals w/ new low-cost bus service? (profit target, mkt share)"
"any specific data on consumer demand?"
Mkt size for current bus service:
buses in fleet
capacity/bus
utilization/bustrips/yr
--> calculate total #tickets/yr
REVENUE:
Price=$15/ticket
tickets=4000/yr
Revenue/yr= $600K
COSTS:
FC sum= $65K
VC sum= $280K
TOT= $345K
GROSS PROFIT:
Revenue-Costs= $600k-345k=255k
% = 255k/600k = 42% > target
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