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Chic Soap Case Study

In: Business and Management

Submitted By ahmedhamdymahmod
Words 633
Pages 3
Distribution Channels Case Study
In this case , we can find some data : * Variable Costs :

* Premium Quality Packing cost =£ 0.14 * Premium Base soap cost =£ 0.08 * Incorporating the perfume in the soap for 300,000 units =£ 0.40 * Gift packs for Christmas = £0.45/5 = 0.09 * Advertising cost for consumers = 100/2000consumers = £0.05 * Energy + maintenance =£ 0.02 * Transportation cost = £0.5 per Kilo =£ 0.075 per unit (150 gm.)

So, total Variable cost = 0.855

* Fixed Costs :

* Land Factory cost =£ 30,000 * Average expenditure for advertising =£ 400,000 * Sales Representative cost = £12,000 * Car cost =£3000 * Skilled Staff in factory cost = £35000 * Production Line cost =£ 25000

So, total Fixed costs =£ 505000

* Average price per unit soap = average price of main competitive products in the premium sector = £1.60+ £1.75+ £1.85+ £1.95+ £1.45 =£8.6/5=£1.72 per unit.

* Estimated target for first year =£ 190 million * 7% =£13.3 million

* Target per Units for first year =£ 13300000 / £1.72 = 7732558 units

* Contribution margin CM =(S-VC)per unit = £1.72-£0.855 =£0.865 per unit

* Break Even Point = FC / CM = 505000/0.865=583815.03 units

1) Who are your target audience?
Research suggested that the main consumer of premium soaps was female 35+, socio-economic group A, concentrated in the South East of England and in large cities elsewhere.
Also the main consumer interested in a changing range of exotic soaps was the working woman aged 25 – 45.
Married men are also potential customers as they would buy the product as a gift to their wives in Christmas. Mothers also would buy the product as a gift to their daughters in Christmas.

2) What…...

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