Option 1 6 SKUs of 8-oz in one or two supermarket channel region

Broker charge 4% of manufacturer sales

Distributor margin 15%
Retailer margin 27%
Manufacturing cost 8-oz cup 0.31
Slotting fees (one time) 60,000 per retail chain
Trade promotion cost (NE region) 7500 per ad per retailer
Trade promotion cost (West region) 15000 per ad per retailer
No. of trade promotions per year 4
Cpmprehensive advertising plan 1.2 mil per region per year
Mno of regions to be launched in 2
SG&A expense 320,000
No. of supermarket chain in NE 11
No. of supermarket chain in west 9
No. of potential units sold 35,000,000
Selling price of 8-oz cups in supermarket 0.74
Volume growth over year 20%

Assumption: The broker fees is included in th SG& A expense

Option 1
Margin Selling Price Cost Price
Retailer 27% 0.74 0.5402
Distributor 15% 0.5402 0.45917
Natureview 32.4868784982 0.45917 0.31

Year 2000 Year 2001

No. of units sold 35,000,000 42,000,000
Selling Price per Unit 0.45917 0.45917
Cost Price per unit 0.31 0.31

Revenue 16,070,950 19,285,140

COGS 10,850,000 13,020,000
Gross Profit 5,220,950 6,265,140

Expenses
SG&A 320,000 320,000
Advertising 2,400,000 2,400,000
Slotting Fees 1,200,000 -
Trade Promotions 870,000 870,000

Total Expense 4,790,000 3,590,000

Net Income 430,950 2,675,140

Option 2 Expand 4 SKUs of 32-oz size nationally

Broker charge 4% of manufacturer sales

Distributor margin 15%
Retailer margin 27%
Slotting fees (one time) 40,000 per retail chain
Average trade promotion cost nationally 8000
No of trade promotions per year 2
No of regions 4
No of retailers 64
Comprehensive advertising plan 12000 per region per year
No. of retailers in NE 25
No. of retailers in MW 30
No. of retailers in SE 33
No. of retailers in West 17
SG&A 160000
No. of potential units sold 5500000
SP 2.7

Assumption: The broker fees is included in th SG& A expense and Growth rate in no of units sold is 20%
Option 2
Margin Selling Price Cost Price
Retailer 27% 2.7 1.971
Distributor 15% 1.971 1.675
Natureview 40.90787 1.67535 0.99

Year 2000 Year 2001

No. of units sold 5,500,000 6,600,000
Selling Price per Unit 1.67535 1.67535
Cost Price per unit 0.99 0.99

Revenue 9,214,425 11,057,310

COGS 5,445,000 6,534,000
Gross Profit 3,769,425 4,523,310

Expenses
SG&A 160,000 160,000
Advertising 48,000 48,000
Slotting Fees 2,560,000 -
Trade Promotions 1,024,000 1,024,000

Total Expense 3,792,000 1,232,000

Net Income -22,575 3,291,310

Option 3 Introduce 2 SKUs of childeren multi-pack into natural foods channe;

Wholesaler margin 7%
Distributor margin 9%
Retailer margin 35%
Price per unit 3.35
No of potential units sold 1800000
Complementary case cost 2.5% of manufacturer sales
Marketing expense 250000
Unit growth rate projection 15%
Option 3
Margin Selling Price Cost Price
Retailer 35% 3.35 2.1775
Distributor 9% 2.1775 1.9815
Wholesaler 7% 1.981525 1.8428
Natureview 37.5955822 1.84281825 1.15

Year 2000 Year 2001

No. of units sold 1,800,000 2,070,000
Selling Price per Unit 1.84 1.84
Cost Price per unit 1.15 1.15

Revenue 3,317,073 3,814,634

COGS 2,070,000 2,380,500
Gross Profit 1,247,073 1,434,134

Expenses
Marketing 250,000 250,000
Complementary Case 82,927 95,366
Total Expense 332,927 345,366

Net Income 914,146 1,088,768