Speed Stick Colgate-Palmolive Company's (CPC) Speed Stick and Lady Speed Stick Stainguard Antiperspirant Deodorant™ were voted by consumers as "products of the year" in 2011. "Tired of yellow armpit stains on your shirts? Speed Stick and Lady Speed Stick proudly introduce Stainguard™ with Stain Defense™ technology", was the launch print headline. This breakthrough line of Speed Stick antiperspirant deodorants uses a patent-pending technology that keeps more antiperspirant on your skin while helping to fight the formation of yellow stains and white residue on clothes. Stainguard™ antiperspirant keeps shirts looking newer longer, while providing the 24-hour odour and wetness protection promised by SpeedStick™.

The following provides information concerning CPC's new product development process.

CPC intends to distribute Speed Stick Stainguard™ through its established distribution channels including grocery stores, pharmacies, convenience and big box stores ensuring 80% availability to their target market. The primary target market for this product is higher than average education and income professional men and women aged 25 to 55 given their propensity for white dress shirts. CPC has earmarked a new advertising budget of $5,000,000 for the initial two-month launch period for this product in Canada. It is expected this budget will generate 65% awareness in this two-month launch period amongst the target market.

There are approximately 33 million people in Canada and according to the latest census 50% are adults, between the ages of 25 to 55. Within this age group 25% hold white-collar positions. CPC's manufacturing facilities are valued at $200 million and they invested an additional $3 million to manufacture this new formula deodorant and have hired a manager to oversee the production with an annual salary of $55,000. Labour costs are estimated at $0.25 per unit, raw materials at $0.65/unit and distribution at $1.00/unit. The consumer price at retail will be $3.50.

CPC conducted concept testing with 1000 respondents in their target market and discovered that 15% of the respondents would definitely not buy this product, 20% probably would not buy it, 25% might buy it, 30% probably would buy it and 10% definitely would buy it. Product use testing concluded a very high level of product reliability and customer satisfaction. As a result, CPC estimates repeat purchase at 90% of 1st time buyers - that is 90% of 1st time buyers will make a repeat purchase within the first two months. 

Q:

1) Compute the market potential (SAM) for this new product based on the information provided in the case.

2) Apply the ATAR model to determine the sales revenue from the Trial.

3) Apply the ATAR model to determine the sales revenue from repeat customers in the firsttwo months.

4) Apply the ATAR model to determine sales revenue in the first year. 

Answer rating: 100% (QA)

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