Effective Case Study Analysis for EMR Innovations Case Study Analysis
If you were Eric and Mary Reynolds, what decisions would you make with respect to marketing strategy? Which target market and positioning strategy do you think make the most sense, and why? What marketing mix would you develop?
As the product in its early lifecycle stage, Eric and Mary are recommended to develop the chat room discussion, promotional brochures and word of mouth to market the product as it would be an efficient way to attract the customers at a lower cost.The target Markets for the Lock-Awn Anti-Billowing Device are those people who are seeking for the accessory for the RV. The company should use the product characteristics as a positing strategy.
The company intended to launch the innovatively new product or service to the market and incorporate the uniqueness and innovation in the product would allow the company to gather a larger customer base. The target market of the industry is affluent, active & consumption oriented consumer groups. The selling price of the product would be 13.23 because it would generate $1374100 from the sales of the breakeven quantity. As the product in its early lifecycle stage, Eric and Mary are recommended to develop the chat room discussion, promotional brochures and word of mouth to market the product, as it would be an efficient way to attract the customers at a lower cost.
Q4. Determine the sales of the Lock-Awn (in units and revenue) needed to break even and the payback period for the initial capital investments, for both the “more-for-more” and “morefor-less” niche. (Hint: Assume the Reynolds borrow $200,000 at 8% interest to be paid back in two annual payments. Further assume that the Reynolds incur maximum marketing expenses. For breakeven analysis, use straight-line depreciation method over 3, 5, and 7 years, respectively, for mold and tooling, office equipment, and assembly and packing equipment.) What is the impact on break-even if sales are higher than expected by 25%? Lower by 25%? What is the impact on break-even if sales are higher than expected by 50%? Lower by 50%? How likely is it that EMR Innovations can break even and recover its investment costs?
In consideration of the financial analysis, the 0.5% rate of return is used to calculate the revenues of the company which amounts to $1374100. The total fixed cost includes onetime production cost, office equipment cost, assembly and packing equipment, product liability insurance, building lease and utilities. Combining all these costs amounts to $65433.33. The variable costs include material cost, packing cost and labor cost amounts $88326.
The sales units of 7010 are used to calculate the breakeven in unit and revenue. The breakeven point in units of the company is 103862 where if the sales are higher than expected by 25%, the breakeven point would be 16617.99. Also, if the sales are lower than expected by 25% the breakeven point would be reduced by 24438. Additionally, if the sales are higher than expected by 50%, the breakeven point would be 9031.51 and if the sales are lower than expected by 50%, the breakeven point would be 10932. With the selling price of 13.23, the company would generate $1374100 from the sales of the breakeven quantity.
Reducing the sales of the product either by 25% or 50% would lead to reduced profits. So, the company is suggested to increase the price of the product in the future due to the strong economic growth & rising buyer’s power and inclination of customers to purchase the product. The calculations can be seen in appendices.
Q5. Before the Reynolds can pursue their dream, they need some start-up money. What other kinds of information will they need to take to either a bank or an investor to seek funding?
Before seeking to finance the business operations i.e. new product development, Reynolds should assess the viability and acceptability of the product in the market. They should evaluate the feasibility of the project and annual cash flows generated from selling products. Examining the credit score before applying for funds is fundamental to assess the creditworthiness of the company. They should also collect the information about collateral that the financial institution would accept to guarantee and secure the loan. Knowing the value that would be offered to investors for their investment in the company is essential to increase the odds of securing the needed capital (Hall, 2012)..............................
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