Assignment 15021

EXHIBIT 1 : COMPETITORS' PRICING IN THE INDIAN SPORTS NUTRITION MARKET (ALL FIGURES IN Rs.)

OPTION

BRAND

APPROXIMATE RETAIL PRICE (5-POUND TUB)

Performance Whey

Optimum Nutrition

4400.00

Gold Whey

Optimum Nutrition

6200.00

ISO Whey

Ultimate Nutrition

7500.00

Hydro Whey

Optimum Nutrition

7100.00

Premium Whey

Muscle Tech

4100.00

Phase 8

Muscle Tech

5000.00

Whey

Six Pack Nutrition

4800.00

Muscle Infusion

Nutrex

5600.00

Whey Pro

Universal Nutrition

5400.00

Hajmo

Kite Nutrition

4800.00

Note - These prices do not represent the maximum retail price, they represent the selling prices on Amazon, inclusive of discounts,if any. 5 Pounds=2.25 kilograms, 4 Pounds=1.8 kilograms.

RKET

EXHIBIT 2 : PRICING OPTION OF STRENGTH PHARMA'S 5-POUND TUB OF MUSCLE RDX (ALL FIGURES IN Rs.) OPTION 1 Competitor based Pricing

OPTION 2 Target Pricing

OPTION 3 Perceived Value Pricing

Retail Price

4500.00

5400.00

6000.00

Retail Gross Margin

900.00

1080.00

1200.00

Manufacturer Price

3600.00

4320.00

4800.00

Variable Cost

2920.00

2920.00

2920.00

Manufacturer Gross Margin

680.00

1400.00

1880.00

% Gross Margin

18.89

32.41

39.17

EXHIBIT 3 : DISTRIBUTION OF TARGET POPULATION OF RUNNERS (BY CITY)

Tier

Total No. of Event Participants

Avg No. of Participants from Local vicinity No. of Cities (60%)

1

37000

22200

2

14000

3 Total

Total Runners

Prospective Customers

Examples

6

133200

19980

Metros

8400

17

142800

21420

Hyd, Pune

2000

1200

60

72000

10800

Lucknow

53000

31800

83

348000

52200

-

EXHIBIT 4 : DISTRIBUTION OF TARGET POPULATION OF CYCLIST (BY EVENT TYPE) Event Type

Total No. of Events

Avg No. of Participants

Total Athletes

Prospective Customers (15%)

Triathalons/ Duathalons

14

600

8400

1260

Racing

50

200

10000

1500

Radonneur

15

50

750

113

Total

79

850

19150

2873

Sales Forecast Forecast Method 1 Total Runners Total Cyclists Total Athletes 25% Athletes buying Health Supplements 15% who might purchase Muscle RDX for firsttime adding 8% each subsequent year plus 72% first-time users buy a second package plus 55% of first-time users continue to buy packages for a year (i.e. 10 more months) Annual Sales

Year 1

Year 2

348,000 19,150 367,150 91,788

348,000 19,150 367,150 91,788

13,768

21,111

9,913

15,200

75,724

116,111

99,405

152,422

348,000 19,150 367,150

348,000 19,150 367,150

66,087

95,459

47,583

68,730

363,479

525,025

477,149

689,214

276,000 11,490 287,490

276,000 11,490 287,490

71,873

94,872

51,749

68,308

395,302

521,796

518,924

684,976

Forecast Method 2 Total Runners Total Cyclists Total Athletes 18% who might purchase Muscle RDX for firsttime adding 8% each subsequent year plus 72% first-time users buy a second package plus 55% of first-time users continue to buy packages for a year (i.e. 10 more months) Annual Sales Forecast Method 3 Total Runners (Tier 1 & 2 Cities only) 60% of Total Cyclists Total Athletes 25% who might purchase Muscle RDX for firsttime adding 8% each subsequent year plus 72% first-time users buy a second package plus 55% of first-time users continue to buy packages for a year (i.e. 10 more months) Annual Sales

Year 3

Year 4

Year 5

348,000 19,150 367,150 91,788

348,000 19,150 367,150 91,788

348,000 19,150 367,150 91,788

28,454

35,797

43,140 unit sales

20,487

25,774

31,061 unit sales

156,497

196,884

237,270 unit sales

205,438

258,455

311,471 unit sales

348,000 19,150 367,150

348,000 19,150 367,150

348,000 19,150 367,150

124,831

154,203

183,575 unit sales

89,878

111,026

132,174 unit sales

686,571

848,117

1,009,663 unit sales

901,280

1,113,346

1,325,412 unit sales

276,000 11,490 287,490

276,000 11,490 287,490

276,000 11,490 287,490

117,871

140,870

163,869 unit sales

84,867

101,426

117,986 unit sales

648,291

774,785

901,280 unit sales

851,029

1,017,081

1,183,135 unit sales

3750

6750

2250

4050

450

810

6450

11610

Gross Margin Forecast Manufacturer gross margin per unit * forecasted annual unit sales Pricing Option 1 Using Forecast Method 1 Using Forecast Method 2 Using Forecast Method 3

Year 1 67,595,400.00 324,461,320.00 352,868,320.00

Year 2 103,646,960.00 468,665,520.00 465,783,680.00

Pricing Option 2 Using Forecast Method 1 Using Forecast Method 2 Using Forecast Method 3

Year 1 139,167,000.00 668,008,600.00 726,493,600.00

Year 2 213,390,800.00 964,899,600.00 958,966,400.00

Pricing Option 3 Using Forecast Method 1 Using Forecast Method 2 Using Forecast Method 3

Year 1 186,881,400.00 897,040,120.00 975,577,120.00

Year 2 286,553,360.00 1,295,722,320.00 1,287,754,880.00

Margin Forecast Year 3 139,697,840.00 612,870,400.00 578,699,720.00

Year 4 175,749,400.00 757,075,280.00 691,615,080.00

Year 5 Cumulative 211,800,280.00 698,489,880.00 901,280,160.00 3,064,352,680.00 804,531,800.00 2,893,498,600.00

Year 3 287,613,200.00 1,261,792,000.00 1,191,440,600.00

Year 4 361,837,000.00 1,558,684,400.00 1,423,913,400.00

Year 5 Cumulative 436,059,400.00 1,438,067,400.00 1,855,576,800.00 6,308,961,400.00 1,656,389,000.00 5,957,203,000.00

Year 3 386,223,440.00 1,694,406,400.00 1,599,934,520.00

Year 4 485,895,400.00 2,093,090,480.00 1,912,112,280.00

Year 5 Cumulative 585,565,480.00 1,931,119,080.00 2,491,774,560.00 8,472,033,880.00 2,224,293,800.00 7,999,672,600.00

600,000,000.00 1,200,000,000.00 1,200,000,000.00 3,000,000,000.00

EXPENSES

Total Advertising Cost

100,000,000.00

Total Manufacturing Cost

120,000,000.00

Total Budget (Yearly)

220,000,000.00

R&D Cost (Sunk Cost)

1,200,000,000.00

Assumptions: Ongoing as % Ongoing of Year 1 50,000,000.00 50%

Total Advertising

Year 1 100,000,000.00

Fixed Manufacturing Costs

120,000,000.00

120,000,000.00

Total Budget

220,000,000.00

170,000,000.00

100%

Total Fixed Costs Sunk Costs Advertising Manufacturing/OH R&D Total

1,200,000,000 1,200,000,000

Year 1 100,000,000 120,000,000

Year 2 50,000,000 120,000,000 -

220,000,000

170,000,000

tal Fixed Costs Year 3 50,000,000 120,000,000 -

Year 4 50,000,000 120,000,000 -

170,000,000

Year 5 50,000,000 120,000,000

Cumulative 300,000,000 600,000,000

170,000,000

1,200,000,000 2,100,000,000

170,000,000

ROI

(5yr cumulative gross margin - 5yr cumulative fixed costs)/ 5yr cumulative fixed costs 4,500 Pricing Option 1 Using Forecast Method 1 Using Forecast Method 2 Using Forecast Method 3

-0.67 0.46 0.38

5,400 Pricing Option 2 Using Forecast Method 1 Using Forecast Method 2 Using Forecast Method 3

Best Forecast 2 and 3 give an ROI -0.32 Pricing greater than the target of 100% in 2 Option 5 Years. 1.84

6,000 Pricing Option 3 Using Forecast Method 1 Using Forecast Method 2 Using Forecast Method 3

-0.08 3.03 2.81

Forecast 2 and 3 give an ROI greater than the target of 100% in 5 Years.

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