Company Overview Of Zoecon Corporation

Doctor Carl Djerassi founded Zoecon Corporation in 1986. A group of scientist including himself developed the first birth control pill for women. The company also went on to be first at developing (IGR) insect growth regulators. It was created to diminish insect populations by preventing the there life cycle. Cockroaches and fleas are some of many harmful insects to the community.

The Problem: “Should Zoecon commercialize the Strike Roach Ender brand by expanding distribution to the 19 city market area in the Southeast United
States?”

(1) Expand distribution to a 19 city area where 80 percent of roach control products are sold
(2) Focus attention on the professional pest control market (e.g., Pest Control Operators),
(3) Contact the makers

When you look at tables below, you will see that about 54% of the market knew about the product but only 6% purchased it. Only anther 30% of that initial 6% repurchased the product.

Profit/Loss: After calculating the predictions of where Zoecon Corporation should expand their product in the 19 city market, you can look over the last two tables below and clearly come to the conclusion that Zoecon Corporation would continue to operate at a loss if they went forward with the expansion trial.

Market Segment Issues: Where Zoecon Corporation went wrong was not giving the customer what they desired, which was a product that would immediately get rid of the infestation. Instead their product advertised that it could take about four months to permanently get rid of the infestation. This would only steer the customer away from the product because of the time span of the product taking effect on the insects. The customer also desired low prices which Zoecon Corporation overlooked and kept there premium priced 50%-75% higher than their

Table1: Unit Contribution Margins
Package Aerosol Fogger
Sales mix 66% 34%
Unit Price $3.14 $2.79
COGS $1.41 $1.26
Units Contribution Margins $1.73 $1.53
Weighted average unit price $3.02
Weighted average unit contribution $1.66

• Computations o Weighted average unit price: Aerosol price ($3.14) x Sale mix of Aerosol (66%) + Fogger price ($2.79) x sales mix Fogger (34%) = $3.02

o Weighted average unit contribution: Aerosol price ($3.14) - COGS of aerosol ($1.41) x sales mix % of aerosol (.66%) + Fogger price ($2.79) -COGS of fogger ($1.26) x sales mix % for fogger 34%) = $1.66

Table2: Break-Even
Fixed cost $1,478,000
Weighted average unit contribution $1.66
BE Unit volume 890,362
BE Dollar sales $1,178,893.24

• Computations o BE unit volume: Fixed cost ($1,478,000) / Weighted average unit contribution ($1.66) = 890,362 units

o BE sales volume: BE units(890,363) x Average sales price ($3.02) =