Janet has operated a very successful fast casual restaurant chain called Lasagna Come Out Tomorrowfor many years. Looking for ways to grow her business, and after receiving thousands of requests to make her lasagna more broadly available, Janet has decided to launch a frozen 5 lb lasagna in the retail channel.

Janets lasagna is a slightly more premium than existing products in the category both from the quality of the ingredients and the feedback from the market research on taste, mouth feel, and visual appeal. Janet also recognizes that her brand awareness and image is not strong in retail channels and, while she will be advertising her product in mass and social media, she doesnt have the financial resources to invest enough money to quickly change this. Finally, she would like to quickly build market share so that she can introduce other related products.

The product has a variable cost, which includes cost to manufacture and package the product, of $4.25. Note that this excludes fixed marketing and overhead costs as well as any profit. Janet has determined that she needs a minimum contribution margin of 40% to achieve her return on investment goals. She has also learned that retailers want a minimum gross margin of 35% but to get their support given that her brand is new to this channel, Janet believes that she needs to be a bit higher than this.

Janets Lasagna Come Out Tomorrow major competitors are:

Worlds Best Lasagna$11.9930% unit market share

Vickys All Natural Organic Lasagna$14.995% market share

Denunzios Delicious Lasagna$11.7920% unit market share

Private Label (store brand)$9.9915% unit market share

Mindys Magnifico Lasagna$12.9910% unit market share

Shawns Saucy & Spicy Creation$12.4915% unit market share

Note that all products are the exact same size.

What price would you recommend Lasagna Come Out Tomorrow be sold for in retail stores and why?

\begin{tabular}{|c|c|c|} \hline Competitive Products & \begin{tabular}{c} Retail Selling \\ Price \end{tabular} & \begin{tabular}{l} Unit Market \\ Share \end{tabular} \\ \hline World's Best Lasagna & $11.99 & 30% \\ \hline Vicky's All Natural Organic Lasagna & $14.99 & 5% \\ \hline Denunzio's Delicious Lasagna & $11.79 & 20% \\ \hline Private Label & $9.99 & 15% \\ \hline Mindy's Magnifico Lasagna & $12.99 & 10% \\ \hline Shawn's Saucy \& Spicy Creation & $12.49 & 15% \\ \hline \multicolumn{3}{|c|}{\begin{tabular}{c} Lasagna Come Out Tomorrow Economics \\ Working Forward From Product Cost \end{tabular}} \\ \hline Product Cost & $4.25 & 60% \\ \hline Target Contribution Margin & & 40% \\ \hline Minimum Required Wholesale Price & \begin{tabular}{l} Formula \\ Required \end{tabular} & \\ \hline Retailer Gross Margin & & 35% \\ \hline Minimum Consumer Selling Price & \begin{tabular}{l} Formula \\ Requred \\ \end{tabular} & \\ \hline \multicolumn{3}{|c|}{\begin{tabular}{l} Lasagna Come Out Tomorrow Economics \\ Working Backwards From Retail Selling Pric \end{tabular}} \\ \hline \begin{tabular}{l} Product Cost \\ Contribution Margin \\ Minimum Required Wholesale Price \end{tabular} & $4.25 & \\ \hline Retailer Gross Margin & & 35% \\ \hline Consumer Selling Price & T.B.D. & \\ \hline \end{tabular}