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The manufacturing overhead for a new company entering the "hair-loss" shampoo market is estimated to be $10 million. The cost of producing a single 16oz bottle of shampoo is $3.00.

1. If the company charged $5 per shampoo, how many bottles of shampoo would it need to break even? Please show your calculations.

2. Competition for the "hair-loss" segment the new shampoo targets charges $13 per bottle of shampoo. If the company pegged their prices to those of competition, how many bottles would it have to sell to break even? Please show your calculations.

3. If the overall "hair-loss" segment is approximately 5MM individuals, and expected to grow at 5% annually, with three major companies already in the market, which pricing strategy would you recommend and why?

Reference no: EM131413672

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