Zoecon Case StudyThe Problem(s): Should Zoecon commercialize their Strike ROACH ENDER brand by expanding their distributions to the 19 cities in the Southeast United States where 80% of roach control products are sold?
Recommendation(s):Zoecon should not expand distribution of the Strike ROACH ENDER brand. The recommendation is based on the analysis of the following decision factors:Profitability – Zoecon did a test market analysis shown in table 1, using it to build table 2. Table 2 shows that the Strike ROACH ENDER had a net loss of $1,204,149.80. If you forecast the same sales across the 19 planned cities, it gives three different alternatives for Net Profit/Loss. The three alternatives are the different approaches to take when estimated the fixed expenses. Table 3 shows the predicted Sales and Profit Analysis of the 19 planned cities. Zoecon will have total revenues equal to $9,368,040.00, and with the unit contribution percentage, Zoecon has $5,182,320.00 contribution dollars. We can use this information to estimate the fixed costs for the 19 planned cities. If you use a per capita approach for the plan, you can get fixed expenses of $20,320,000.00, which results in a net loss. If you use the rule of thumb approach, with $10,000,000.00 for fixed expenses, it will still occur in a net loss. Table 4 shows the differential for each alternative. The break even units is much higher than the projected sales for the 19 planned cities. Even the last alternative for estimating fixed expenses gives a small profit of $1,085,320.00. This makes the venture somewhat marketable, but with a net profit as low as this, the potential losses for Zoecon would exceed the potential rewards. The losses from an effective and needed marketing campaign to compete in the crowded market make it a huge risk. The sales would not be a sufficient to gain a prominent market share over a substantial amount of time. But two methods of estimating show a net loss, while one shows a slight net profit. Regardless, all of them carry great risks with not enough potential rewards.
Price and Market Competition – Zoecon sells their Strike ROACH ENDER for $4.49 and $3.99, for the aerosol and foggers, respectively. This price is much higher than any other competitors on the market at the time, by 50-75%. They put themselves as a premium product, since their product has a unique compound and “permanent” effect. But the research showed that the consumer market is geared towards the easier to use products and the do it yourself containers. If Zoecon doesnt reduce their price, it will make it hard for them to gain any significant market share against the cheaper competition. Raid captured 45% of the consumer market alone, with other competitors such as Boyle-Midway Division at 12% with their Black Flag, and d-con Company at 10%. No other competitor had any share
Fraud: The Rise of Internet Technology Randal: I have been very pleased to find and read recent research by Randal Horowitz: “Internet Technology is Changing the Balance.
I call it innovation and the rise of the Internet”. The research shows that many of the technologies and applications that are currently available, such as smartphones and computers, are much more efficient at changing the balance of payments. They reduce the friction between the two sides of the customer, that is the way of the future. What these studies, as far as I know, does not mean is that there will not be a big push towards Internet, but that a large amount of research is being done.
Randal recently wrote, “When you are spending all your money on something for which you expect that it will be effective, the results are not very impressive. In fact, the results have been quite encouraging. On the one hand, the average user spends a little more than a second to access a site that is not optimized for their needs, while the average user is spending over a third to access the same web server, which is significantly faster and less frequent.” To put it in context, an 80% user experience is a good average, which shows that a site that is optimized mainly to the high end users needs 50% more bandwidth so that it will not have to use too much bandwidth.
Randal has identified a number of techniques to bring down prices, which include the creation of new mobile apps, improved security of websites, and increased user interactions with merchants. However, his research shows that these solutions only enhance the user experience through “smart” data manipulation. A web browser or a web page that is not optimized for the needs of the user will still require to access the web for its own purposes, and that “they require a little more time to load than a web page that is not optimized for the needs of the user.” Furthermore, while a website that is optimally suited for the needs of a smaller user is much less likely to see a slow down times, when compared to a website that does not use high speed data transfers, it will see a steady increase in the number of visits, which has real consequences.
Randal does propose that the cost savings of the “Smart” technologies will also be reduced since that will make it simpler for large content providers to deal with their clients. Randal also noted that many services have some sort of low-cost solution that is not directly comparable to current business models such as using free credit card transactions versus using credit card transactions. Moreover, he concluded, that the current service industry is not good enough. While Randal does not want to say everything that they are aware to the consumer, or even the people that we meet, as soon as possible when the information is released. He would like more information, though it would be good if we can share in this report with all interested parties.
Randal has written about the new technology we are seeing and is working with some of our