As the population of cats in North America increases, so does the ownership of them as pets. Omega Paw’s novel and unique litter box, self-cleaning with a closed top, has tapped into the market with customer satisfaction and positive reviews. The company looks forward to reflect this positivity with an increase in sales and profit levels. Introducing the product in grocery stores would result in weekly sales of $126,000, highest among other alternatives. With direct and indirect competition along with the production constraints, Ebert (president) is motivated to break through these barriers and prolong the growth phase of this product with increased sales and profits.
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In terms of indirect competition from automated litter boxes, Omega Paw provides an attractive alternative for a significant price difference. The segment that represents 80% of the market would have a lot of consumers using the traditional style litter trays and Omega paw will have to use to a marketing distribution strategy that would reach out to those consumers.
Financial Analysis: Distribution Channel | Retail Price | Incremental expenses | Trade Magazines | $18.00 | $4,000/month | Mail Orders | $18.00 | $10,000/week | Mass Distribution Centres | $25.20 | $7.2/unit of markup + $50,000 | Grocery Stores | $36.00 | $15.08/unit variable + $3/unit fixed |
Based on the capacity of 3,500 units per week, the following are the projected results under different distribution alternatives. | Trade Magazines | Mail Order | Mass Distribution | Grocery Stores | Revenue | $63,000 | $63,000 | $88,200 |