PROFITABILITY/MARKET SHARE ANALYSIS

Based upon the projection data given in Table C and Table D for revenue calculations and Table E for cost
calculations for 1993 and 1994 : -
Revenue Calculations:
NICHE
YEAR
Revenue form retail Units through Professional Units through promotion and sampling Total
1993 8M X 2.02 1.2M X 0.79* 1.3M X 0.95 18.34 M
1994 15M X 2.02 1.2M X 0.79* 1.3M X 0.95 32.483 M

MAINSTREAM
YEAR Revenue form retail Units through Professional Units through promotion and sampling Total
1993 26.8M X 1.76 3.2M X 0.79* 4.3M X 0.95 53.781M
1994 44.1MX 1.76 3.2M X 0.79* 4.3M X 0.95 84.229M
*80% of the professional sales would happen @ 0.79 and all remaining units would be sold at 0.95
Assumption: The promotions sampling and units sold through promotions and professionals are broken up
equally between 1993 and 1994.
Cost Calculations:
YEAR NICHE MAINSTREAM
1993 27.7M 84.78M
1994 33.45M 93.17M

NICHE POSITIONING MAINSTREAM POSITIONING

40 100

30 80
60
20
40
10 20
0 0
1993 1994 1993 1994

Revenue Cost Revenue Cost

Using the slopes and extrapolating , the breakeven point for Niche positioning is approximately 1994 + 2
months. Similarly, for Mainstream positioning, the breakeven is approximately at 1994+ 6 months.

IMPLICATIONS:
1. In Case of Niche positioning, the profit generation would start 4 months earlier as compared with the
mainstream products.
2. Even though the breakeven for mainstream is late, the steepness (Slope) relative to the cost curve is
more than niche product. Therefore, in the long run, the profits (revenue-costs) would be greater for
mainstream