CHIPMAN-UNION, Inc.
Odor-Eaters Socks

EXECUTIVE SUMMARY

In March 1980, Hosiery market in United States was quite competitive in terms of price and players. Chipman-Union Inc. was one of the major players in this market which produced a whole gamut of hosiery products ranging from men’s dress hosiery to socks for all types of customers like men, boys, girls, misses and athletes.
Chipman-Union was established in 1972 by a merger of the Union Manufacturing Company with Charles Chipman’s Sons Company. In 1979, CU had to narrow down its product lines to increase profit margins by removing production inefficiencies. By 1980 it primarily manufactured men’s and boy’s casual and athletic socks, which were sold to the retail/ distribution …show more content…

First the total fixed cost over a period of two years is calculated.

Fixed Cost for a period of 2 years (in $) | Salary of 3 Sales Man | 420000 | Advertising Expenses | 1000000 | Cost of 15000 Display Units | 1500000 | Cost of Promotion | 211500 | Allowances for retailers on initial orders | 1621000 | Total Fixed Cost | 4752500 | Break Even Volume(pack of 3)with margin of $0.97 | 4899484 | Break Even Volume in Dozen Pairs | 1224871 | Required Market Share Per Year | 1.66 % |

Calculation of Total Estimated Sales
To arrive at the total expected sales over a two year period we use data from the consumer research carried out. The target market represented about 65 million men living in 46% of the 71 million households in the United States.

Market Opportunity Analysis | Total Available Target Market | 65000000 | Unaided Awareness Generation Rate | 25% | Conversion Rate from Research | 185/600 | % of People Definitely Would Buy from Test Group of 185 | 38% | Estimated Sales for 1st Year Trial (in millions) | 1.9 | Repeat Purchase for 1st Year (in millions) assuming 50% of Trial Users Convert to Repeat Purchasers | 0.85*2packs=1.9 | Estimated Sales for 2nd Year (in millions) assuming 1st year Repeat Purchasers Buy Again 3 Packs Annually |