Can someone post solution so my group and I can compare and see if we did our calculations correctly. THANKS!
SmartestPharma™ is considering two marketing options for the Canadian launch of their Mouthx in 2012.
i. A “soft” launch using mainly public relations and some kickoff events at an estimated a cost of $500 000.
ii. A “full” launch, using a large number of multi-media communication vehicles, glossy, high-production creative and saturated frequency at a cost of $2.5 million.
Now that you know the contribution margin and have calculated how many consumers are likely to buy this product in Canada (as well as the likely rate they will buy it at, per year), determine and justify which approach SmartestPharma™ should take in launching this product in Canada (i.e. soft launch mostly PR for $500 000, or full out launch for $2.5 million).
Using the information in this background document and your own research, identify and discuss in sentence and paragraph form the key market and financial issues that are relevant to this launch.
————————————–… Soft Launch__________________ Full Launch
Retail Selling Price
Total Distribution Mark-up %
MouthX Selling Price
MouthX Contribution Margin %
MouthX Cost
MouthX Contribution Margin $
Marketing Campaign (Fixed Costs)
Break-Even in Units (bottles)
Break-Even in Customers
Target Segment Size
Required Market Share of Recommended Target Market to break-even
Additional information:
Suggested Retail Price (MSRP): 15$ per bottle of 150 mL
Suggested retail strategy (MSRS): Given its added medicinal ingredients and benefits, MouthX costs more to manufacturer (CM of only 15%, compared to typical CM=25%), and should command a price premium that should never be discounted or price promoted at-shelf. Manufacturer-led media behind the brand will be significant through year one of launch. BASES research indicates niche consumers will purchase this product consistently throughout the year. Actual usage and consumption patterns are yet to be observed.