Table 1: Test Market Analysis

Unit Contribution Margins (From Exhibit 2)

Package Aerosol Fogger
Sales Mix 66% 34%
Unit Price $ 3.14 $ 2.79
Cost of Goods Sold (COGS) $ 1.41 $ 1.26
Unit Contribution Margins $ 1.73 $ 1.53
a.Weighted Avg. Unit Price $ 3.02
b. Weighted Avg. Unit Contribution $ 1.66

Break-Even Analysis
Fixed Cost $1,478,000
Weighted Avg. Unit Contribution $1.66
c. Break-Even Unit Volume 890,362 units
d. Break-Even Dollar Sales $ 1,178,893.24

Sales and Profit Analysis (From Exhibit 3)

Trial Purchase Repeat Purchase
e. House Holds 1,170,000 70,200
Trial or Repeat Purchase Rate 6% 30%
Avg. Unit Purchase (units) 1.3 3.5
Avg. Unit Price ($) 3.02 3.02
f. Sales $ 275,605.20 $ 222,604.20
Total Sales $ 498,209.40
g. Contribution $ 273,850.20
Less: Fixed Costs $1,478,000
h.Profit/Loss $ (1,204,149.80)

Estimated Test Market Share Assessment (From Exhibit 4)

Market Size $ 400,000,000
% Sales for ant and roach products 40.0%
% total roach sales in 19 city market 50.0%
% Households in exposed test market 5.3%
% Insecticides sold in supermarkets 70.0%
% Insecticides sold May-October 75.0%
% Insecticides in aerosol and fogger form 74.0%
i. Estimated Market Share $ 1,647,240.0
j. Market share required to break-even 71.57%

Table 1 Computations
a. Weighted Avg. Unit Price: (sale price of aerosol*sales mix % for aerosol)+(sale price of fogger*sales mix % for fogger) =
($3.14*.66)+($2.79*.34)=3.02
b. Weighted Avg Unit Contribution: ((sale price of aerosol-COGS of aerosol)*sales mix % for aerosol)+((sale price of
fogger-COGS fogger)*sales mix % for fogger) = (($3.14-1.41)*.66)+(($2.79-1.26)*.34)=$1.66

c. Break-even unit volume: Fixed costs/Unit contribution = $1,478,000/$1.66=890,362 units

d. Break-even sales volume: Break-even units * avg. sale price= 890,363*$3.02 = $1,178,893.24

e. Number of Households: Repeat households = Trail households*trail rate = 1,170,000*.06=70,200

f. Sales: Households*trial rate or repeat purchase rate*avg. unit purchase*avg. unit price
Trial Sales = 1,170,000*.06*1.3*$3.02=$275,605.20
Repeat sales = 70,200*.30*3.5 units*$3.02= $222,604.20

g. Contribution: (Total Sales/weighted avg. unit price)*Avg. Unit contribution= ($498,209.40/$3.02)*$1.66=$273,850.20

h. Profit/Loss: Contribution Margin-Fixed costs= $273, 850.20-$1,478,000

i. Estimated Market Share: Market size*% ant/roach sales*% total roach sales in 19 city region*% test market households*
% supermarket sales*% May-october sales*% aerosol and fogger sales
= $400,000,000*.4*.5*.053*.7*.75*.74=$1,647,240

j. Break-even market share: break even sales/estimated market share*100= $1,178,893.24/$1,647,240*100=71.57%

 Table 2: Market Forecast Analysis for 19 City Commercialization
Sales and Profit Analysis: Cost Scenario A
Trial Purchase
a. House Holds 22,000,000
Trial Purchase Rate 6%
Avg. Unit Purchase (units) 1.3
Avg. Unit Price ($) 3.02
b. Sales $ 5,182,320.00
Total Sales
c. Contribution
Less: Fixed Costs
d. Profit/Loss

Sales and Profit Analysis: Cost Scenario B

Trial Purchase
a. House Holds 22,000,000
Trial Purchase Rate 6%
Avg. Unit Purchase (units) 1.3
Avg. Unit Price ($) 3.02
b. Sales $ 5,182,320.00
Total Sales
c. Contribution
Less: Fixed Costs
d. Profit/Loss

Sales and Profit Analysis: Cost Scenario C

Trial Purchase
a. House Holds 22,000,000
Trial Purchase Rate 6%
Avg. Unit Purchase (units) 1.3
Avg. Unit Price ($) 3.02
b. Sales $ 5,182,320.00
Total Sales
c. Contribution
Less: Fixed Costs
d. Profit/Loss
Computations
a. = Repeat households = Trail households*trail rate
b. Sales = Households*trial rate or repeat purchase rate*avg. unit purchase*avg. unit price
c. = (Total Sales/weighted avg. unit price)*Avg. Unit contribution
d. =Contribution Margin-Fixed costs
 Table 3: Break-Even Analysis for 19 City Commercialization

Break-Even: Cost Scenario A

Fixed Cost $20,320,000
Weighted Avg. Unit Contribution $1.66
a. Break-Even Unit Volume 12,240,964
b. Break-Even Dollar Sales $ 36,967,710.84

Break-Even: Cost Scenario B

Fixed Cost $4,064,000
Weighted Avg. Unit Contribution $1.66
a. Break-Even Unit Volume 2,448,193
b. Break-Even Dollar Sales $ 7,393,542.17

Break-Even: Cost Scenario C

Fixed Cost $10,000,000
Weighted Avg. Unit Contribution $1.66
a. Break-Even Unit Volume 6,024,096
b. Break-Even Dollar Sales $ 18,192,771.08

Table 3 Computations

a. Break-even unit volume: Fixed costs/Unit contribution

A = $20,320,000/$1.66=2,448,193 units
B = $4,064,000/$1.66=2,448,193 units
C = $10,000,000/$1.66= 6,024,096 units

b. Break-even dollar sales: Break-even units * avg. sale price

A = 12,240,964 units*$3.02 = $36,967,710.84
B = 2,448,193 units*$3.02 = $7,393,542.17

C = 6,024,096 units*$3.02 = $18,192,771.08

 Table 4: Market Share Analysis for 19 City Commercialization

Cost Scenario A
a. Market Size (with 10% growth rate) $ 440,000,000
% Sales for ant and roach products 40.0%
% total roach sales in 19 city market 50.0%
% Insecticides sold in supermarkets 70.0%
% Insecticides sold May-October 75.0%
% Insecticides in aerosol and fogger form 74.0%
b. Estimated Market Share $ 34,188,000.0
c. Market share required to break-even 108.13%
Break-Even Dollar Sales (from Table 3) $ 36,967,710.84
Cost Scenario B
a. Market Size (with 10% growth rate) $ 440,000,000
% Sales for ant and roach products 40.0%
% total roach sales in 19 city market 50.0%
% Insecticides sold in supermarkets 70.0%
% Insecticides sold May-October 75.0%
% Insecticides in aerosol and fogger form 74.0%
b. Estimated Market Share $ 34,188,000.0
c. Market share required to break-even 22%
Break-Even Dollar Sales (from Table 3) $7,393,542
Cost Scenario C
a. Market Size (with 10% growth rate) $ 440,000,000
% Sales for ant and roach products 40.0%
% total roach sales in 19 city market 50.0%
% Insecticides sold in supermarkets 70.0%
% Insecticides sold May-October 75.0%
% Insecticides in aerosol and fogger form 74.0%
b. Estimated Market Share $ 34,188,000.0
c. Market share required to break-even 53%
Break-Even Dollar Sales (from Table 3) $18,192,771
Computations
a.
b. Market
Market Size:
Share:Market
Marketsize * (1+growth
size*% ant/roachrate)=$400,000,000*1.10=$440,000,000
sales*% total roach sales in 19 city region*% test market households*%
supermarket sales*% May-october sales*% aerosol and fogger sales=
= $440,000,000*.4*.5*.7*.75*.74=$34,188,000
c.Break-even dollar sales: Break-even sales/estimated market share*100
A. = $36,967,710.84/$34,188,000*100=108.13%
B. =$7,393,542/$34,188,000=22%
C. $18,192,771/$34,188,000=53%
mercialization
A
Repeat Purchase
1,320,000
30%
3.5
3.02
$ 4,185,720.00
$ 9,368,040.00
$ 5,149,320.00
$20,320,000
$ (15,170,680.00)

B
Repeat Purchase
1,320,000
30%
3.5
3.02
$ 4,185,720.00
$ 9,368,040.00
$ 5,149,320.00
$4,064,000
$ 1,085,320.00

C
Repeat Purchase
1,320,000
30%
3.5
3.02
$ 4,185,720.00
$ 9,368,040.00
$ 5,149,320.00
$10,000,000
$ (4,850,680.00)

unit price
rcialization
ercialization

Cost Scenario B
a. Market Siz ###
% Sales for a 40.0%
% total roach 50.0%
% Insecticide 70.0%
% Insecticide 75.0%
% Insecticide 74.0%
0
gion*% test market households*% b. Estimated ###
c. Market sha 22%
Break-Even Do$7,393,542
Cost Scenario C
a. Market Siz ###
% Sales for a 40.0%
% total roach 50.0%
% Insecticide 70.0%

% Insecticide 75.0%
% Insecticide 74.0%
b. Estimated ###
c. Market sha 53%
Break-Even Do ###
Computations
a. Market Size:
May-october Marketaerosol
sales*% size * (1+grow
and
fogger sales=
$440,000,000*.4*.5*.7*.75*.74=$34,1
88,000
c.Break-even dollar sales: Break-even
sales/estimated market share*100
A. = $36,967,710.84/$34,188,000*1
B. =$7,393,542/$34,188,000=22%
C. $18,192,771/$34,188,000=53%
 Marketaerosol
les*% size * (1+grow
and
4*.5*.7*.75*.74=$34,1
ollar sales: Break-even
market share*100
,710.84/$34,188,000*1
42/$34,188,000=22%
71/$34,188,000=53%
Table 3: Market Share Analysis for 19 City Commercialization