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Dermavescent Case Study

Prepared for Dr. Brunswick's MKT 435 Marketing Strategy Seminar, Northern Michigan Univesity, Marquette Michigan
by

Sam Hoats

on 20 October 2014

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Transcript of Dermavescent Case Study

Contribution Comparison
Market
Forecasts
"Do-Nothing"
Test Market
MKT 435
Mr. Sam Hoats
Dr. Brunswick
.
.
US Market Overview
2005, the U.S dollar volume of women’s wet shaving products was
$550 million
at manufacturer’s prices
Market sales growth has been in the range of 3 to 5 percent per year since 2000
Shaving cream and gel = 23 percent of the total U.S dollar volume. This is equivalent to
$126,500,000
.
SSSG has a low market share of 2.94 percent
SSSG has been on the market for 15 years
Maturity Stage


Cont. reduction in costs
Innovation can increase market share


Sales volume has/began to peak
See a decrease in market share
Decrease in profits
"Do-Nothing"
Dermavescent Labs
should not
follow through with Courtwright’s market-test recommendation
Dermavescent Labs, Inc
For the desk of: Phoebe Masters
Case Study: Soft and Silky Shaving Gel
Should the test market be done?
Cost of $40,000
Forecasts
Benefits



Challenges
total loss in sales
of
$12,030.80
, a
loss in gross profit
of
$9,498
and a
decline in unit sales
of
$6,332
Assuming a 0.32% decrease [ "low" estimate of decrease in sales ]
Assuming a 2% decrease [ "high" estimate of decrease in sales ]
loss in sales
of
$74,480
, a
loss in gross profit
of
$58,80
0, and a
loss in unit sales
of
$39,200
.
Loss in sales: Between
$12,030.80
and
$74,480
Loss in gross profit: Between
$9,480
and
$58,800
Loss in units sold: Between
$6,332
and
$39,200

Recommendation
I. For current and non current customers, the aerosol can
was unanimously the favorite
II.
Twenty percent
of SSSG customers said they would convert to the
10-ounce can
;
Twenty-five
said they would convert to the
5 ½-ounce can
.
III.
One-fourth
of non customers said they would switch over to the aerosol can irrespective of size
IV. Customers expected to find the aerosol can next to the tube container. Non customers expected to find the aerosol can stocked with women’s toiletries.
V. The pricing was acceptable and favored by current customers, non customers thought that the price was somewhat high but would try the product because of the value-added features
VI. Current SSSG customers are extremely loyal

1 New Message From
"Contribution Comparison"
Contribution per unit:
$1.50
for a 5.5 oz. tube
$1.44
for a 5.5 oz. aerosol
$1.75
for a 10 oz. aerosol

Contribution per ounce:
$0.27
for a 5.5 oz. tube
$0.26
for a 5.5 oz. aerosol
$0.18
for a 10 oz. aerosol
Contribution Comparisons Between SSSG's Three Package Design
A
through
D
Forecast A
shows gross profit when compared to the low estimate of the do-nothing scenario (
-0.32%
), which is an increase of
$55,143.56
shows the comparison of gross profit for the high estimate of the do-nothing scenario (
-2%
), which is an increase of
$104,445.56
So, Forecast A: Low estimate of the 5.5 ounce aerosol package will have an increase in gross profits of between
$55,143.56
and
$104,445.56
above shows gross profit when compared to the low estimate of the do-nothing scenario (
-0.32%
), which is an increase of
$105,325.37
gross profit for the high estimate of the do-nothing scenario (
-2%
), which is an increase of
$154,627.37
Forecast B
So, Forecast B: High estimate of the 5.5 ounce aerosol package will have an increase in gross profits of between
$105,325.37
and $
154,627.37
Forecast C
above shows gross profit when compared to the low estimate of the do-nothing scenario (
-0.32%
), which is a
decrease
of
$30,551
gross profit for the high estimate of the do-nothing scenario (
-2%
), which is an increase of
$18,750.90
So, Forecast C: Low estimate of the 10 ounce aerosol package will have a decrease or increase in gross profits of between
-$30,551.10
and
$18,750.90
.
Forecast D
above shows gross profit when compared to the low estimate of the do-nothing scenario
(-0.32%)
, which is an increase of $
150,585.27
gross profit for the high estimate of the do-nothing scenario
(-2%
), which is an increase of
$199,887.27
So, Forecast D: High estimate of the 10 ounce aerosol package will have an increase in gross profits of between
$150,585.27
and
$199,887.27
.
Recommendation
Marketing Mix
The gross profit of introducing the 5.5 ounce aerosol can is between the ranges of
$55,143.56
to
$154,627.37
The gross profit of introducing the 10 ounce aerosol can is between the ranges of
-$30,551.10
to
$199,887.27

introduce in the 5.5 ounce aerosol can alongside the existing 5.5 ounce tube container.
Stock the 5.5 aerosol can next to the 5.5 ounce tube

The range between the high & low forecasts and estimates for the 5.5 ounce is
$99,483.81
[$154,627.37 -- $55,143.56]

The 10 ounce tube is not recommended is because the range between the high-low forecasts and estimates is
$230,438.37
[$199,887.27 – (-$30,551.10)],
Product:

Place:

Promotion:

Price:
Questions?
Full transcript