Max1m 1230 042507

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This is a presentation for my Management class. We had to create a new and innovative consumer product as our semester long project. We created a vitamin based gum that stimulated natural energy in those that consumed the product. This is our final presentation and product propossal.

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Max1m 1230 042507

  1. 1. Tom O’Connor Julia Walker Lauren Dusak Kristina Gentilozzi Kaitlin McQuade Frank Marallo Derek Szu-Tu Lauren Faga Brandon Miniman Sean Helmig Carolyn McCarthy Chuck Sgammato Mike Pattavina Angela Russo M ax1m I nnovations
  2. 2. Our Product <ul><li>Vitamin B12 based gum </li></ul><ul><li>10 sticks per pack </li></ul><ul><li>Healthy alternative to caffeine </li></ul><ul><li>Functional gum </li></ul>Maxim Innovations
  3. 3. Benefits of Vitamin B12 <ul><li>Improves memory </li></ul><ul><li>Enhances learning capabilities </li></ul><ul><li>Increases blood flow </li></ul><ul><li>Promotes healthy metabolism </li></ul><ul><li>Long term energy </li></ul><ul><li>No Negative Side Effects </li></ul>Maxim Innovations
  4. 4. Why Put B12 in a Chewing Gum? <ul><li>Best absorbed through tongue </li></ul><ul><li>Convenient </li></ul><ul><li>Good stress reliever </li></ul><ul><li>Increases focus </li></ul><ul><li>Easy to use </li></ul>Maxim Innovations
  5. 5. Vitamin Market <ul><li>$5.431 Billion Dollars (2006) </li></ul><ul><li>5% growth each year </li></ul><ul><li>US is now health conscious </li></ul><ul><li>Creating a new niche </li></ul>Maxim Innovations
  6. 6. Target Market & Market Share <ul><li>Market Size </li></ul><ul><ul><li>117.8 million adults use vitamins </li></ul></ul><ul><ul><li>37.7 million within our age target </li></ul></ul><ul><li>Customer Profile </li></ul><ul><ul><li>18-34 years old </li></ul></ul><ul><ul><li>Active, health conscious </li></ul></ul><ul><ul><li>Busy lifestyle </li></ul></ul><ul><li>Survey Results </li></ul><ul><ul><li>82.5% willing to buy </li></ul></ul>Maxim Innovations 4.9% 5,729,729 5 4.4% 5,202,048 4 3.8% 4,523,520 3 3.2% 3,769,600 2 1.6% 1,884,800 1 Market Share People Year
  7. 7. Distribution <ul><li>Nationwide : </li></ul><ul><ul><li>Region has little effect </li></ul></ul><ul><ul><li>Optimize sales potential </li></ul></ul><ul><li>Distribution : </li></ul><ul><ul><li>VMS Stores </li></ul></ul><ul><ul><li>Specialty Food Stores </li></ul></ul><ul><ul><li>Gyms </li></ul></ul><ul><ul><li>CVS </li></ul></ul>Maxim Innovations
  8. 8. Promotion <ul><li>Magazine Advertisements </li></ul><ul><li>Counter Advertisements </li></ul><ul><li>Online Advertisements </li></ul><ul><li>Promotions/ Giveaways </li></ul>Maxim Innovations 16.8 Self 23.4 Sports Illustrated 19.2 Shape 6.5 Men's Fitness 7.5 Women's Health 17.5 Men's Health Circulation (millions) Magazine
  9. 9. SWOT Analysis Maxim Innovations <ul><li>Threats </li></ul><ul><li>Clearly established competition </li></ul><ul><li>Numerous substitutes </li></ul><ul><li>Opportunities </li></ul><ul><li>Creating a new niche </li></ul><ul><li>Differentiation </li></ul><ul><li>Health conscious Americans </li></ul><ul><li>Weaknesses </li></ul><ul><li>More expensive </li></ul><ul><li>One flavor </li></ul><ul><li>Start up company </li></ul><ul><li>Limited resources </li></ul><ul><li>Strengths </li></ul><ul><li>Unique product </li></ul><ul><li>Provides energy </li></ul><ul><li>Convenient </li></ul><ul><li>Maximizes absorption </li></ul><ul><li>Impulse buy </li></ul>
  10. 10. CM and Net Income Wholesale Price: $1.59 Cost: - $0.14 Contribution Margin: $1.45 Projected Net Income Contribution Margin Maxim Innovations
  11. 11. Break Even Maxim Innovations
  12. 12. What the Future Holds Maxim Innovations <ul><li>Net Present Value: $9,093,533 </li></ul><ul><li>Internal Rate of Return: 29% </li></ul><ul><li>Projected Sales Price: $25 million </li></ul><ul><li>Your share: $12.25 million </li></ul>In Seven Years…
  13. 13. Why are there no other vitamins in Boost 12? <ul><li>Other vitamins may inhibit the absorption </li></ul><ul><li>Other vitamins wouldn't contribute to the product's energy aspect </li></ul><ul><li>It would increase costs to add other vitamins </li></ul>Maxim Innovations
  14. 14. Chewing Gum Manufacturers <ul><li>Primary </li></ul><ul><ul><li>Kangyi Foods and Drink Co., Ltd. </li></ul></ul><ul><ul><ul><li>Gave us best price of $0.14 per 10 piece package </li></ul></ul></ul><ul><ul><ul><li>Were able to mix B12 with little extra cost </li></ul></ul></ul><ul><ul><ul><li>Included packaging was easiest at this point </li></ul></ul></ul><ul><ul><ul><li>Shipping was easiest from this point </li></ul></ul></ul><ul><li>Secondary </li></ul><ul><ul><li>Yake (China) Co., Ltd. </li></ul></ul><ul><ul><ul><li>Gave us price of $.18 per 10 piece package </li></ul></ul></ul><ul><ul><ul><li>Added cost for B12 incorporation </li></ul></ul></ul><ul><ul><ul><li>Not including packaging </li></ul></ul></ul><ul><ul><ul><li>Area is a little further away </li></ul></ul></ul>Maxim Innovations
  15. 15. Vitamin B12 Suppliers <ul><li>Primary </li></ul><ul><ul><li>TNN Development Limited </li></ul></ul><ul><ul><ul><li>Cheap rate for Vitamin B12 </li></ul></ul></ul><ul><ul><ul><li>Fastest insured shipping for every purchase </li></ul></ul></ul><ul><ul><ul><li>Great Reputation </li></ul></ul></ul><ul><ul><ul><li>Closest to our manufacturer out of any of our contacts. </li></ul></ul></ul><ul><li>Secondary </li></ul><ul><ul><li>Chemivale Comercio Exterior </li></ul></ul><ul><ul><ul><li>Cheapest rate for Vitamin B12 </li></ul></ul></ul><ul><ul><ul><li>Fast, insured shipping </li></ul></ul></ul><ul><ul><ul><li>Located in Brazil </li></ul></ul></ul>Maxim Innovations
  16. 16. Common Side Effects of Caffeine <ul><ul><li>Dizziness </li></ul></ul><ul><ul><li>Headache </li></ul></ul><ul><ul><li>Muscle tension </li></ul></ul><ul><ul><li>Nausea </li></ul></ul><ul><ul><li>Unusual tiredness </li></ul></ul><ul><ul><li>Jitters </li></ul></ul><ul><ul><li>Anxiety </li></ul></ul><ul><li>Restlessness </li></ul><ul><li>Confusion </li></ul><ul><li>Dehydration </li></ul><ul><li>Fast breathing </li></ul><ul><li>Increased </li></ul><ul><li>heart rate </li></ul><ul><li>Irritability </li></ul><ul><li>Muscle twitching </li></ul><ul><li>Stuffy Nose </li></ul><ul><li>Frequent </li></ul><ul><li>Urination </li></ul><ul><li>Vomiting </li></ul><ul><li>Nervousness </li></ul><ul><li>Seizures </li></ul>Maxim Innovations
  17. 17. Existings Products **** It is a proven fact that Vitamin B12’s absorption is inhibited by certain vitamins, including Vitamin C, 1 of the 10 essential vitamins found in Vitaball Purpose: Distribution: Target Market: Maxim Innovations Energy Seeking Adults! Children Sticks Gumballs Delivers Vitamin B12 to promotes the production of red blood cells, increased metabolism and more ENERGY Delivers 100% Recommended Daily Allowance of 10 essential vitamins Boost 12 Vitaball
  18. 18. Vitamin B12 Absorption Through Tongue According to the article, Vitamin B12 Cobalamin , sublingual (under the tongue) delivery of Vitamin B12, such as through a gum or tablet form, is most effective. This method of delivery allows the for the quickest way for B12 to be absorbed straight into the bloodstream. Maxim Innovations
  19. 19. Functional Gum Market “ Wrigley, Cadbury and Hershey all continue to take steps in new product development …. If a smaller company develops a functional gum type that is able to challenge the existing hierarchy of teeth whitening gums, it is likely that they would make an attractive target to one of these larger players.” Quote on www.gmid.euromonitor.com. Maxim Innovations
  20. 20. Taste Preference Maxim Innovations Source: Euromonitor International estimates 10.00 10.00 10.00 Lemon  9.00 9.00 9.00 Apple  7.00 7.00 7.00 Juicy Fruit  6.00 6.00 6.00 Cinnamon  5.00 4.00 4.00 Wintergreen  4.00 5.00 5.00 Bubble Gum  3.00 3.00 3.00 Mint  2.00 2.00 2.00 Peppermint  1.00 1.00 1.00 Spearmint  2006 2005 2004 Rank Table 7 Leading Flavors for Gum 2004-2006
  21. 21. Have you had your B12 today? Recommended Dietary Allowances for Vitamin B12 Source: www.ods.od.nih.gov Maxim Innovations 2.4 19+ 2.4 14-18 1.8 9-13 1.2 4-8 0.9 1-3 Allowance (μg/day) Age (years)
  22. 22. Patent Pricing <ul><li>Patent 6,083,527: claims for candy like confections </li></ul><ul><li>Patent 3,352,689: claims sugarless gum </li></ul><ul><li>No patent on B12 Gum </li></ul>Application Fee $300 Search Fee $500 Examination Fee $200 Post-Allowance Fee $1,400 International filing Fee $1,086 International Search Fee $2,059 Lawyer $2000 Initial Filing Fee $750 $8,295 TOTAL Maxim Innovations
  23. 23. <ul><li>Priced against vitamins </li></ul><ul><li>Cheaper then other forms </li></ul><ul><li>Bottle of 100 B12 Vitamins: $12 </li></ul><ul><li>Vitamin B12 Patch: $24.95 </li></ul><ul><li>Vitamin B12 Injection: $10-$20 </li></ul>Why is Boost 12 priced $1.99? Maxim Innovations
  24. 24. Ad Cost per year Rate Base per year Men’s Fitness 668,360 6,500,000 Men’s Health 1,461,600 17,500,000 Women’s Health 834,756 7,500,000 Shape 1,202,640 19,200,000 Total $ 4,167,356 50,700,000 Yr 1 Sports Illustrated 2,222,755 23,400,000 Self 1,230,636 16,800,000 4,167,356 50,700,000 Total $ 7,620,747 90,900,000 Yr 2 Magazine Advertising Costs Maxim Innovations
  25. 25. Other Advertising Costs <ul><li>Counter: </li></ul><ul><li>$61,261 in year one </li></ul><ul><li>$81,158 in year two </li></ul><ul><li>No costs in year three, four, or five </li></ul><ul><li>Online: </li></ul><ul><li>$60,000 per year (years one through five) </li></ul><ul><li>*$15,000 per website </li></ul><ul><li>Four Websites: GNC, Men’s Health, Men’s Fitness, Shape </li></ul><ul><li>Gym Membership: </li></ul><ul><li>$5,760 per year (years one through five) </li></ul><ul><li>*$960 per membership, offered 6 times a year. </li></ul>Maxim Innovations
  26. 26. Year One: $4,294,377 Year Two: $7,767,665 Year Three: $8,136,182 Year Four: $8,494,800 Year Five: $8,494,800 Total Advertising Costs Per Year Maxim Innovations
  27. 27. Valuation of Company Residual Value $16,093,533 NPV $9,093,533 Projected Sales Price $25,187,066 Maxim Innovations
  28. 28. Break Even (10% increase best case) Maxim Innovations
  29. 29. Projected Income (10% sales increase) NPV = $14,419,233 IRR = 38% Maxim Innovations
  30. 30. Sales Figures (Expected) Maxim Innovations 305,772 552 46 5322 Total 19,944 72 6 277 Trader Joes 17,616 48 4 367 Bally 6,480 48 4 135 Sports Clubs 24,000 60 5 400 LA Fitness 25,536 48 4 532 Gold's Gym 8,592 48 4 179 World Gym 9,264 48 4 193 Whole Foods 33,000 60 5 550 Vitamin Works 9,600 60 5 160 Vitamin Shoppe 151,740 60 5 2529 GNC Stores Total # boxes # boxes/ yr # boxes / month # Stores YEAR 2008
  31. 31. Sales Figures (Expected Cont.) <ul><li>Year 2009 (250% increase) 764,430 </li></ul><ul><li>Year 2010 (20% increase) 917,316 </li></ul><ul><li>Year 2011 (20% increase) 1,100,779 </li></ul><ul><li>Year 2012 (20% increase) 1,320,935 </li></ul><ul><li>Year 2013 (15% increase) 1,519,075 </li></ul><ul><li>Year 2014 (15% increase) 1,746,937 </li></ul>Maxim Innovations
  32. 32. Sales Forecast (Worst 10% decrease) <ul><li>Year 2008 $275,195 </li></ul><ul><li>Year 2009 (250% increase) $687,987 </li></ul><ul><li>Year 2010 (20% increase) $825,584 </li></ul><ul><li>Year 2011 (20% increase) $990,701 </li></ul><ul><li>Year 2012 (20% increase) $1,188,842 </li></ul><ul><li>Year 2013 (15% increase) $1,367,168 </li></ul><ul><li>Year 2014 (15% increase) $1,572,243 </li></ul>Maxim Innovations
  33. 33. Sales Forecast (Best 5% increase) <ul><li>Year 2008 $321,061 </li></ul><ul><li>Year 2009 (250% increase) $802,652 </li></ul><ul><li>Year 2010 (20% increase) $963,182 </li></ul><ul><li>Year 2011 (20% increase) $1,155,818 </li></ul><ul><li>Year 2012 (20% increase) $1,386,982 </li></ul><ul><li>Year 2013 (15% increase) $1,595,029 </li></ul><ul><li>Year 2014 (15% increase) $1,834,283 </li></ul>Maxim Innovations
  34. 34. Taxes (Expected) Maxim Innovations $ 4,514,224 $ 3,423,476 $ 2,479,680 $ 913,079 $ (509,131) $ (773,755) $ - Tax Payable $ - $ - $ - $ 913,079 $ (509,131) $ (890,137) $ (773,755) Total NOL $ 4,514,224 $ 3,423,476 $ 2,479,680 $ 1,422,210 $ 381,006 $ - $ - Income Tax Expense $ - $ - $ - $ - $ - $ (116,382) $ (773,755) NOL $ 4,514,224 $ 3,423,476 $ 2,479,680 $ 1,422,210 $ 381,006 $ (116,382) $ (773,755) Tax Expense $ 13,277,129 $ 10,069,046 $ 7,293,175 $ 4,182,971 $ 1,120,606 $ (342,301) $ (2,275,749) Earnings before Taxes 2014 2013 2012 2011 2010 2009 2008
  35. 35. Taxes (Worst Case) Maxim Innovations $ 3,634,959 $ 2,658,897 $ 1,306,256 $ (508,573) $ (1,376,741) $ (912,784) $ - Tax Pay $ - $ - $ 1,306,256 $ (508,573) $ (1,376,741) $ (1,376,741) $ (912,784) Total NOL $ 3,634,959 $ 2,658,897 $ 1,814,829 $ 868,168 $ - $ - $ - Income Tax Exp $ - $ - $ - $ - $ (36,083) $ (463,957) $ (912,784) NOL $ 3,634,959 $ 2,658,897 $ 1,814,829 $ 868,168 $ (36,083) $ (463,957) $ (912,784) Tax Exp $ 10,691,055 $ 7,820,286 $ 5,337,732 $ 2,553,435 $ (106,125) $ (1,364,578) $ (2,684,659) EBIT 2014 2013 2012 2011 2010 2009 2008
  36. 36. Taxes (Best Case) Maxim Innovations $ 4,954,752 $ 3,806,205 $ 2,812,105 $ 1,641,947 $ (57,285) $ (646,835) $ - Tax Payable $ - $ - $ - $ 1,641,947 $ (57,285) $ (646,835) $ (704,240) Total NOL $ 4,954,752 $ 3,806,205 $ 2,812,105 $ 1,699,231 $ 589,551 $ 57,405 $ - Income Tax Expense $ - $ - $ - $ - $ - $ - $ (704,240) NOL $ 4,954,752 $ 3,806,205 $ 2,812,105 $ 1,699,231 $ 589,551 $ 57,405 $ (704,240) Tax Expense $ 14,572,800 $ 11,194,721 $ 8,270,897 $ 4,997,739 $ 1,733,972 $ 168,837 $ (2,071,293) Earnings before Taxes 2014 2013 2012 2011 2010 2009 2008

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