The problem of the Zoecon Coporation at this moment is how they can best allocate their technical, financial, and marketing resources for their IGR compounds. Some executives have suggested an informal consumer market expansion with their Roach Ender product to 19 cities, concentrate on the pest control operator (PCO) market with the Roach Ender, or sell its IGR compound to firms actively engaged in reaching the consumer market insecticide market. Some of these suggestions/alternatives are mutually exclusive and some are not, therefore Zoecon Executives should use the test market data analysis, in addition to their experience and knowledge in the insecticide industry to …show more content…
By comparison, the average gross profit on insecticides sold to the consumer market was 55%. A major negative of this alternative is that this action could terminate Zoecon from the consumer market by being unable to capture a profitable market share with a Zoecon product after a competitor enters.
After a thorough analysis of each alternative, I would recommend that Zeocon direct its resources to the pest control operators. As shown in the data below, the test market results showed more than $1 million in losses during the period, and from the profit estimates of the 19-cities, selling on the consumer market would more than likely continue a loss in profit. This is also supported by the fact stated above that after two years in the 19 city consumer market, Flea Ender still had not reached the profitable level. With this alternative, marketing and advertising costs are sharply reduced due to these PCO’s knowing the product and their ability to articulate the benefits to the end users. Zoecon has experience in this type of market their product Precor. By 1985, Precor had captured about 80% of all flea product sales made through PCO’s, veterinary clinics, and pet stores. Some Zoecon executives attribute the success of Precor to the fact that these distributors could explain the unique benefits and application of methoprene. Even though reaching an agreement with a 3rd party manufacturer would basically eliminate the need for