The manufacturing overhead for a new company entering the "hair-loss" shampoo market is estimated to be $10 million. The cost of producing a single 16oz bottle of shampoo is $3.00.
If the company charged $5 per shampoo, how many bottles of shampoo would it need to break even? Please show your calculations.- Competition for the "hair-loss" segment the new shampoo targets charges $13 per bottle of shampoo. If the company pegged their prices to those of competition, how many bottles would it have to sell to break even? Please show your calculations.
- If the overall "hair-loss" segment is approximately 5MM individuals, and expected to grow at 5% annually, with three major companies already in the market, which pricing strategy would you recommend and why