Zoecon Case Study

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Individual Case Study for Zoecon Corporation The Problem - Should Zoecon commercialize the Strike Roach Ender brand by expanding distribution to the 19 city market area in the southeast United States? Recommendation – Zoecon should commercialize the Strike Roach Ender brand to 19 states in the southeast area of the United States. My justification for this recommendation is documented below along with visual representation of facts presented in the case. Earnings Potential – During the test market phase of the Strike Roach Ender product the sale of the product was broken down into those who tried the product initially and of those first time buyers, who repurchased the product. The test market showed that only 6 percent of the market tried product and of those 6 percent 30 percent bought 3 times their initial purchase. Let us assume that the factors of the test market are mirrored once they distribute to the 19 cities in the southern tier of the U.S. Table 1 below shows the potential profits given the same variables as the test market with a few changes. The biggest change is the fixed costs adjusted for a bigger market. Since the new market is roughly 4 times the size of the test market, I multiplied the expenses to match the new market accordingly. The test market numbers given in Table 1 shows a loss of $1,204,150, which is mostly attributable to the high market expenses. But if we look at the projected numbers in Table 1, we see that by introducing to a larger market the initial sales are enough to combat the expenses by the residual effect of repeat customers. Total sales increase 20 times while expenses only increase 4 times. This gives Zoecon a profit of $1,088,422. Market Share Potential – Table 2 shows the breakdown of the market in terms of the 19 city distribution next year. The market is projected to grow at a rate of 10 percent for the next few

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