1 PharmaSolutions NaturalRelief PharmaSolutions, an up and coming


Question Description:

35

I have a homework assignment I could use some help with please 3 pages Marketing Math homework.docx 1 PharmaSolutions NaturalRelief PharmaSolutions, an up and coming pharmaceutical company, produces NaturalRelief. NaturalRelief is an all-natural, mild pain reliever. The MSRP is $14.04 for a pack of 250 tablets. The retail margin is 30% of selling price. It costs PharmaSolutions a $1.50 per bottle for ingredients and $0.50 for packaging. Sales for NaturalRelief were 900,000 units in the year that just ended and are projected to remain the same. Each product at PharmaSolutions is operated as an independent business unit. General and administrative expenses for NaturalRelief total $1,500,000. Advertising for NaturalRelief is budgeted at $1,500,000 for the upcoming year. To help offset any sales that NaturalRelief might lose from new products entering the market, PharmaSolutions is considering changes to its salesforce compensation system. One plan is to increase salaries for NaturalRelief sales representatives. There are currently 50 sales representatives for NaturalRelief with salaries totaling $6,000,000. Under the plan each would receive a raise of $20,000 a year. A second plan is to begin offering salespeople a 5% commission on the sales of NaturalRelief. They do not currently earn any commission. There is also a plan under consideration to cut the MSRP of NaturalRelief by 15%. VitaLean PharmaSolutions is in the process of launching VitaLean, a combination weight loss aid and vitamin supplement. The product is used throughout the country by medical facilities specializing in weight loss. The product is sold to those facilities at $15 a package. The weight loss clinics in turn charge their patients $30 per package. The fixed manufacturing and marketing cost associated with VitaLean total $245,000. It costs PharmaSolutions $0.50 per package for manufacturing and packaging, and another $0.50 per package for shipping. Nationwide, there are approximately 2,000 weight loss clinics, three-quarters of which dispense weight loss pills and vitamins. Those clinics are comprised of 10% large institutions; the remaining facilities are small. Large facilities typically place three orders per year, each for 75 units, and the smaller practices demand an average of 10 units, twice per year. PharmaSolutions plans to limit its marketing to large facilities. Retail sales of weight loss vitamin pills in large weight loss clinics total $35,000,000 per year. Qutoxiline The scientists at PharmaSolutions have had a major breakthrough in painkillers and hope to replace the frequent use of prescription headache pills by patients with severe recurring headaches with an injectable medication. Currently, the average target patient suffering from severe recurring headaches spends $50 for a yearly doctor’s office visit to get a prescription for a long-acting pain pills. That prescription pain reliever costs about $40 a month. Patients also spend around $5 a month for other OTC medicines to curb side effects of the prescription medication. PharmaSolutions offers Qutoxiline that guarantees no headaches for three months with a single injection. PharmaSolutions plans on making the medication available at an MSRP of $35 per injection. Doctors who administer the injections expect to get a 40% markup over cost on Qutoxiline. In addition to the cost of the injection, the patient will have to pay $70 to for a doctor’s office visit and required blood tests at the time of each injection. Patients will also have to pay about $15 a month in other medicines to curb side effects. Questions: Please show all work 1. Ignoring the effects of any new product being launched, what is the projected gross profit margin in dollars for NaturalRelief for the upcoming year if the price change is not put into effect? 2. Of the new pain relief tablets introduced to the market, which one are retailers more likely to promote. 3. What is the trade mar

Answer

35