Portable Heat Pad case
The main issue is how to prepare good marketing plan for this product. The costs of
production 1 unit are VC = bag + sodium + trigger + bag + labor = 8 USD/unit. Market
volume for institutional market it is 29’332 units and for Home market it is 189’000 units.
The price of retailers will be 40 USD/unit, with margin 25% they will buy from
wholesalers by 30 USD/unit. Distributors in order to achieve 15% of margin will buy from
us for 25,5 USD/unit. Spending for marketing between 100-200K USD and 25% for
institutional market of this amount we can make quick statement. We assume that to
Hospitals we will sell with no less price as 25,5 USD/unit same as to Distributors,
depreciation of equipment 5 years and that we need 1 sales person for institutional market
and 2 for home market. Based on this we get figures gathered in table below:
Institutional Home Institutional & Home
low MC high MC low MC high MC low MC high MC
Market capacity 29 332 29 332 189 000 189 000 218 332 218 332
Selling Price USD/unit 25,5 25,5 25,5 25,5 25,5 25,5
Variable Costs USD/unit 8 8 8 8 8 8
Contribution margin USD/unit 17,5 17,5 17,5 17,5 17,5 17,5
Contribution margin total USD 513 310,00 513 310,00 3 307 500,00 3 307 500,00 3 820
810,00 3 820 810,00
Total Fixed Costs 162 305,88 162 305,88 222 305,88 222 305,88 222 305,88 222 305,88
Marketing Costs 25 000 50 000 100 000 200 000 125 000 250 000