SKIN SOLUTION

Your company has just made the scientific breakthrough of the century. It has invented a wrinkle cream that really works. One application results in smooth, wrinkle-free skin without costly and painful plastic surgery. There are other products that claim they eliminate wrinkles, but they only conceal them for an hour or two. Your cream works so well it needs to be used only once a month to keep skin silky. The cream is relatively inexpensive to produce with a total production cost of 20 cents per ounce. The cream could, therefore, be priced at either a competitive level or below it. The firm is not sure which policy is the best to follow.

When your Silky Skin Solution is promoted, your firm wants to have as many tubes as possible on the retailers' shelves. Thus, the firm plans to offer its wholesalers a much larger discount than is normal.

If the product is handled correctly, the return on investment should be between 40 and 70% after taxes. It would be the most profitable product in your firm.

Assume that you are the product manager for Silky Skin Solution. Don't forget to justify your answers.

1. Describe how you would package the product

1. What pricing policy or strategy would you recommend?

1. Describe the business relationship you would have with your wholesalers?

1. What marketing approach will you use when it comes to advertising and distribution?

1. Where do you think skin cream falls on the product life cycle? Explain Why

1. Assuming you decide to sell a container of cream for $50 and the variable cost to manufacture it is $2. With monthly fixed costs of $520,000. Calculate your break-even point and be sure to write the formula