Zoecon Corporation Case Study

Ryan J. Graber

rjg0130

Individual Case Summary for

Zoecon Corporation

MKTG 5150.007

Marketing Management

Summer 2016

Attached is my summary for the Zoecon Corporation Case. Included are 4 tables which provide support for any of my recommendations.

The Problem: Zoecon Corporation is facing a problem about the future of their Strike ROACH ENDER pest control:

• Should Zoecon commercialize the Strike ROACH ENDER brand by expanding distribution to the 19-city market area in the Southeast United States?

Recommendations: My recommendation is for Zoecon to not expand distribution of the Strike ROACH ENDER brand. The recommendation is based on the analysis of the following decision factors that I have found relevant to the case:

Profitability. Although 6% of the households in the proposed city test market tried the product and 30% of market that tried the product became repeat buyers, the test market is not profitable. Table 1 below shows us that losses for the test market are greater than $1.2 million. With the anticipated 10% growth in the pest control market, the forecasted losses for the 19 city initial market deployment exceeds $2 million. A product launch cost of $10 million was taken into consideration for this calculation. Table 3 shows the total sales dollars needed in 1986 would need to exceed $18 million in order for Zoecon to break even in this test market. This requires a growth rate larger than 32%.

Opportunity Cost of PCO Sales. If Zoecon chooses to move forward with distribution of Strike ROACH ENDER, they will pass up on the chance to invest an additional $500,000 into sales of GENCOR to PCO’s. They will need to generate $2.3 million in sales in order to break even on the annual $500,000 investment (shown in table 4). This would require them to control .16% of the insect control market forcasted for the year 1986.

Core Competencies: Although Zoecon has gained the support of specialized organizations, Strike FLEA ENDER shoed very slow growth which has led me to the conclusion that selling to the consumer market is not something that Zoecon should pursue yet as it is not one of their core competencies. Selling to the experts of the industry and to consumers are two different ball games, and will require more research to be able to do so.