Reference no: EM133419436
Assignment:
Please help provide solution for below case with explanation.
Background
Alacer Corp. is evaluating 3 new immune supplement innovations to launch for next year in their immune in their Emergen-C. The innovations will be tested in 250 Target stores and 500 Walgreens stores for the 1st year. If the test is successful, the item will be in all stores the following year for both retailers.
Scenarios
The first innovation is a Gummy item. The team estimates it will sell 2 units per store per week next year. The revenue is $11 per unit and the cost is $6 per unit. It will be supported with $300,000 in Marketing spend.
The second innovation is an On-The-Go item in a new format. The team estimates it will sell 1.5 units per store per week next year. The revenue is $14 per unit and the cost is $5 per unit. It will be supported with $550,000 in Marketing spend.
The third innovation is a Powder item. The team estimates it will sell 2 units per store per week next year. The revenue is $9 per unit and the cost is $4 per unit. It will be supported with $350,000 in Marketing spend.
Additional Information
The current Quality P&L for Emergen-C this year is:
Revenue Cost of Goods: $2,300,00
Cost of Goods: $875,000
Gross Margin: $1,425,000
Margin%: 62%
Marketing: $500,000
Profit: $925,000
Profit%: 40.2%
Questions
(1) What is the P&L for each Innovation?
(2) Which innovation would you launch and why?
(3) What other information would you want to have to make a decision?
(4) What would you recommend the team look at to improve the P&L for any of the innovations?