Pricing

As given cost of manufacturing Rs. 9000

Advertisement

State-wise advertisement

Regional tv ad cost per second = Rs.28001

2 regional tv channels advertising 15 seconds of ad 3 times per day throughout the year

=2800x15x3x365x2 = Rs.9.198 Cr

Regional newspaper ad2 per square cm= Rs.40

3 regional newspapers advertising half page in 30 days in a year

=40x800x3x30 = Rs.0.288 Cr

Banner and other promotion = Rs. 2.00 Cr

Total ad cost per state per year = Rs. 11.486 Cr

Total state ad cost = Rs. 11.486x 20 states = Rs. 229.72 Cr

Nation-wise advertisement

National tv ad cost per second (Star tv) = Rs.6640

National tv ad cost per second (Color tv) = Rs.4950

National tv ad cost per second (Sony tv) = Rs.4500

3 national tv channels advertising 15 seconds of ad 3 times per day throughout the year

= Rs.26.43 Cr
1 www.themediaant.com

2 www.ad2publish.com
National newspaper ad per square cm= Rs.60

3 national newspapers advertising half page in 30 days in a year

=60x800x3x30 = Rs.0.432 Cr

Total ad cost nation-wise per year = Rs. 26.86 Cr

Online ad cost per year = Rs. 1 Cr

Net total ad cost = Rs. 229.72 + 26.8 + 1 = Rs. 257.58 Cr

Distribution Cost

100 exclusive showroom metro cities = Rs. 24 Cr (assumptions)

200 exclusive showroom in tier-2 cities = Rs. 24 Cr (assumptions)

Logistics cost per year = Rs. 20 Cr (assumptions)

Sales & service cost per year = Rs. 20 Cr (assumptions)

Total = Rs. 88 Cr

Grand total ad cost = Rs. 345.58 Cr ~ 346 Cr

Total Indian market share assumption = Rs. 7000 Cr (Source IBEF for FY 18)

We estimates our strategy to develop 8% market = Rs. 555 Cr for the first
year

To achieve it our target the variable cost of the washing machine = Rs. 555 – 346 Cr

= Rs. 209 Cr

Sales quantity estimates for first year = 1,50,000 units

Promotion cost per unit = 346 Cr/ 1.5 lakh units

= Rs. 23,066

Cost of manufactured per unit = Rs. 9,000

Total cost of washing machine per unit = Rs. 32,066

Profit margin 15 % = Rs. 4,810

Retail Price per unit = Rs. 36,876

~ Rs. 37,000