 |
 |
 |
 |
|
 |
 |
economic group A, concentrated in the South East of England and in large cities
elsewhere. The average purchase of the 150 gramme soap was once every 3 weeks. An
increasing proportion of the soap was bought as gifts, especially at Christmas. In the
previous year, around 25 per cent of the total premium soap sector was purchased during
the period early November to late December.
7. Most advertising in the sector was in women's magazines. It was estimated that it would
cost around £100 to reach every 2000 consumers in the appropriate socio-economic
group. The competition advertised heavily; average expenditure for the leading companies
was around £400,000 per annum.
8. A sales representative would cost around £12,000 per annum; a company car would be
£3,000 per annum. Such a sales representative could visit either 500 outlets direct or deal
with 15 chains of wholesalers.
9. The costs of packaging would be high. High quality packaging with the appropriate
perfume design on the label would cost £0.14 per unit; with a minimum print run of 40,000
units. It was anticipated that gift packs of the five perfumed soaps for the Christmas
season would be an additional £0.45 to produce with a minimum production run of 25,000
units.
10. The company had access to five of the leading perfumes in the country. These
accounted for approximately 20 per cent of total fragrance sales - the market has been
and will remain highly fragmented. The costs of incorporating the perfume in the soap was
£0.40 per unit based on a minimum annual quantity of 300,000 units; £0.65 per unit based
on an annual quantity of 200,000 units, and £0.80 on an annual quantity of 100,000 units.
11. The soap base was widely available from a number of alternative suppliers. Costs
varied considerably from year to year depending on the commodity market; in the year of
the plan the base costs for a 150 gram bar were £0.08 for the highest quality.
12. Filling, molding and packing machinery could be bought from a variety of sources. A
small but complete production line would cost around £25,000; it would be able to produce
1200 units per hour, and would occupy 2000 square feet of factory space. Changing the
perfume and the packaging for each new production run would take around 2 hours.
13. The production process would require skilled staff to monitor quality. It was estimated
that three individuals would be needed, with an annual base salary of £35,000.
14. Research showed that the typical consumer perceived premium soap as 'a touch of
luxury'; an element of sophistication in an otherwise boring existence; a low cost way of
giving a gift which would be appreciated. The main consumer interested in a changing
range of exotic soaps was the working woman aged 25 - 45; over that age purchase
patterns tended to become static.
15. The company could use national parcel carriers to distribute the products to the
customer. It would cost on average £0.50 per kilo; though deliveries outside the immediate
area would be considerably more expensive. The company had initially decided to locate
near to the main source of demand in the South East of England.
16. There were a number of sites that had proved suitable for the location of the factory.
The costs for the required 4000 square feet were on average £25000 per annum. The new
 |