Rosenberg Manufacturing Corp. is considering marketing their new hearing aid in city of "Big Smoke". This device is targeted at hearing impaired over the age of 60 years. As she considers the possibility, VP/Marketing reviews the subsequent data for FY 2013:
Retail price : $499
Retail margin : 45%
Introductory promotional outlays, 2013 : $199,000
R & D on hearing aid, FY's 2011, 2012 : $179,000
Wholesale margin : 25%
Manufacturing costs/unit : $89
Rosenberg's sales commission : 6% of manufacturer's selling price
Population of Big Smoke" : 2,500,000
Proportion of population over 60 : 15%
How many units must Rosenberg sell in 1st year to break even? Carefully describe,
a) How many units must Rosenberg sell in first year to break even? Carefully describe, including any assumptions that you make
b) If 25% of "over 60" population is hearing impaired, Find what is Rosenberg's break even market share in 2013?
c) If Rosenberg has four competitors in market, assess Rosenberg's prospects of breaking even in first year. Incorporate market share from (b) above into your assessment. Carefully describe your reasoning.