Tender Care Diaper

Analysis of case study

Tender care diaper

Suggested Strategy-Diaper Rash Strategy

Break even analysis of the three strategy

Diaper Rash strategy

1 No of Doctor and Nurses in USA 400,000

2 No of Doctor and Nurses in California 11%*400000 44000

3 Mailing List($60/1000) 2640

4 Cost to print and mail a broucher cover letter and post card($250/1000) 11000

5 Sample Diaper $400/1000 17600

6 Demonstration Cost $6 Per 2.5 doctor 105600

7 Convention and advertisement 30,000

Total Fixed cost 166,840

Contribution margin per diaper- .09 cents

Break even Quantity- TFC/Contribution margin

=166840/.09 =1853777 diaper

=1.8mn

Total California Market

No of Kids in California 1.21mn

No of diaper used daily per child 4

Total No of Diaper daily 4.84mn diaper daily

Depend upon the time of launch of the product we can also calculate the market share require to break even.

The special Occasion strategy

1 No of House hold in California 11% 900,000 990,000

2 No of Organisation in California 11% *30000 3300

3 Mailing Cost $50/1000 49665

4 $250,000 in Baby magazine 250000

5 $500000 in Direct mail 500,000

Total Cost 799665

Contribution Margin per diaper - .06cents per diaper

Break even quantity- 799665/.06=13327750

=13.2mn

Head on strategy

Since we don’t have adequate data regarding the amount of money spend on each of the media like television/magazine /other media except the ratio which is 60:30:10

So we are assuming that they have to spend at least half of what the other major player are spending in the market

As per the case study P&G spend annually $40mn in advertisement and Kimberly spend $19Mn in advertisement

From a safe side even if we consider Kimberly figure for California market it comes to $2.09mn

If RMM want to spend half of it it would be approximately $1Mn

So breakeven quantity for RMM in head on strategy= $10,00000/.03=33.33mn diaper

Benefits and drawbacks of each of the strategy

The benefit and drawback of each strategy has been evaluated on the basis of following Constraints

Capital-Although stock issue will help them to raise the capital but they will use California market as pilot sales market to make maximum use of investors fund and minimize risk

Risk- The Tender Care Diaper will form the platform for all future new product offering and failure In this case will jeopardize their strategy and will force them to change their strategy

Time-The products need to be launched as early as possible to give RMM the first mover advantage and to capitalize on maximum revenue generation potential

Competition-Depending upon the strategy Tender Care Diaper has to compete with directly or indirectly with the established player like P&G and Kimberly

FDA Approval- depending upon the strategy RMM is opting FDA approval will prove to be hindrance to the marketing plan

Benefit and Draw back of each strategy-

Diaper Rash Strategy

Positive of Diaper Rash strategy

1-No direct Competition-Tender Care Diaper will be positioned among Diaper Rash product ,this will limit the price comparison among consumer

2-Physician Recommendation-People are more likely to buy a product that are recommended by a physician and moreover RMM already enjoy a reputation among physician due to their photolytic brand

3-Higher Contribution margin of $0.09

4-Conservative and Low marketing budgetвЂ"The fixed promotional cost is lowest leading to lower break even quantity

5-Brand differentiation- Since there is no diaper in this category with the claim and FDA approval