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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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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
Max1m
Innovations
Our ProductOur Product
• Vitamin B12 based gum
• 10 sticks per pack
• Healthy alternative to caffeine
• Functional gumMaxim Innovations
Benefits of Vitamin Benefits of Vitamin B12B12
• Improves memory
• Enhances learning capabilities
• Increases blood flow
• Promotes healthy metabolism
• Long term energy
No Negative Side Effects Maxim
Innovations
Why Put B12 in a Chewing Why Put B12 in a Chewing Gum?Gum?
• Best absorbed through tongue
• Convenient
• Good stress reliever
• Increases focus
• Easy to use
Maxim Innovations
Sales Potential
5
6
7
8
Years 2006 2007 2008 2009 2010 2011 2012
Dol
lars
(In
Bill
ions
)
Vitamin MarketVitamin Market• $5.431 Billion Dollars (2006)
• 5% growth each year
• US is now health conscious
• Creating a new niche
Maxim Innovations
Target Market & Market & Market ShareMarket Share
Year People Market Share
1 1,884,800 1.6%
2 3,769,600 3.2%
3 4,523,520 3.8%
4 5,202,048 4.4%
5 5,729,729 4.9%
• Market Size• 117.8 million adults use vitamins• 37.7 million within our age target
• Customer Profile• 18-34 years old• Active, health conscious• Busy lifestyle
• Survey Results • 82.5% willing to buy
Maxim Innovations
DistributionDistributionNationwide:
• Region has little effect
• Optimize sales potential
Distribution:• VMS Stores
• Specialty Food Stores
• Gyms
• CVS
Maxim Innovations
PromotionPromotion• Magazine Advertisements
• Counter Advertisements
• Online Advertisements
• Promotions/ Giveaways MagazineCirculation (millions)
Men's Health 17.5
Women's Health 7.5
Men's Fitness 6.5
Shape 19.2
Sports Illustrated 23.4
Self 16.8
Maxim Innovations
SWOT AnalysisSWOT AnalysisStrengths
• Unique product • Provides energy• Convenient • Maximizes absorption• Impulse buy
Weaknesses• More expensive • One flavor• Start up company• Limited resources
Opportunities• Creating a new niche • Differentiation• Health conscious Americans
Threats• Clearly established competition• Numerous substitutes
Maxim Innovations
CM and Net IncomeCM and Net IncomeWholesale Price: $1.59
Cost: - $0.14
Contribution Margin: $1.45
-4
-2
1
4
6
9
11
2007 2008 2009 2010 2011 2012 2013
Year
Dol
lars (
in m
illio
ns)
Worst Expected Best$0.14
$1.45
$0.40
$0.00
$0.50
$1.00
$1.50
$2.00 Mark Up
CM
Cost
Projected Net Projected Net IncomeIncome
Contribution Contribution MarginMargin
Maxim Innovations
Break EvenBreak Even
-10
-5
0
5
10
15
20
25
30
1 2 3 4 5 6 7
Year (1 = 2007)
Inco
me ($
Mill
ions)
Worst Case Expected Case Best Case
Maxim Innovations
• Net Present Value: $9,093,533
• Internal Rate of Return: 29%
• Projected Sales Price: $25 million
• Your share: $12.25 million
In Seven Years…
What the Future What the Future HoldsHolds
Maxim Innovations
Maxim Innovations
Why are there no other vitamins in Boost 12?
• Other vitamins may inhibit the absorption
• Other vitamins wouldn't contribute tothe product's energy aspect
• It would increase costs to add other vitamins
Chewing Gum Manufacturers• Primary
– Kangyi Foods and Drink Co., Ltd.• Gave us best price of $0.14 per 10 piece package • Were able to mix B12 with little extra cost• Included packaging was easiest at this point• Shipping was easiest from this point
• Secondary– Yake (China) Co., Ltd.
• Gave us price of $.18 per 10 piece package • Added cost for B12 incorporation• Not including packaging• Area is a little further away
Maxim Innovations
Vitamin B12 Suppliers• Primary
– TNN Development Limited• Cheap rate for Vitamin B12 • Fastest insured shipping for every purchase • Great Reputation• Closest to our manufacturer out of any of our contacts.
• Secondary– Chemivale Comercio Exterior
• Cheapest rate for Vitamin B12 • Fast, insured shipping • Located in Brazil
Maxim Innovations
Common Side Effects of Caffeine
• Dizziness
• Headache
• Muscle tension
• Nausea
• Unusual tiredness
• Jitters
• Anxiety
• Restlessness
• Confusion
• Dehydration
• Fast breathing
• Increasedheart rate
• Irritability
• Muscle twitching
• Stuffy Nose
• FrequentUrination
• Vomiting
• Nervousness
• Seizures
Maxim Innovations
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
Delivers 100% Recommended Daily
Allowance of 10 essential vitamins
Delivers Vitamin B12 to promotes the production of red blood cells, increased
metabolism and more ENERGY
Gumballs Sticks
Children Energy Seeking Adults!
Purpose:
Distribution:
Vitaball Boost12
Target Market:
Maxim Innovations
Maxim Innovations
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
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
Taste Preference
Table 7 Leading Flavors for Gum 2004-2006
Rank 2004 2005 2006
Spearmint 1.00 1.00 1.00
Peppermint 2.00 2.00 2.00
Mint 3.00 3.00 3.00
Bubble Gum 5.00 5.00 4.00
Wintergreen 4.00 4.00 5.00
Cinnamon 6.00 6.00 6.00
Juicy Fruit 7.00 7.00 7.00
Apple 9.00 9.00 9.00
Lemon 10.00 10.00 10.00
Source: Euromonitor International estimates
Maxim Innovations
Have you had your B12 today?
Recommended Dietary Allowances for Vitamin B12Age (years) Allowance
(μg/day)
1-3 0.9
4-8 1.2
9-13 1.8
14-18 2.4
19+ 2.4
Source: www.ods.od.nih.gov
Patent Pricing
• Patent 6,083,527: claims for candy like confections
• Patent 3,352,689: claims sugarless gum
• No patent on B12 Gum
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
Maxim Innovations
1.Priced against vitamins
2.Cheaper then other forms
Bottle of 100 B12 Vitamins: $12
Vitamin B12 Patch: $24.95
Vitamin B12 Injection: $10-$20
Why is Boost 12 priced $1.99?
Maxim Innovations
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
Other Advertising CostsCounter:• $61,261 in year one• $81,158 in year two• No costs in year three, four, or five
Online:• $60,000 per year (years one through five)• *$15,000 per website• Four Websites: GNC, Men’s Health, Men’s Fitness, Shape
Gym Membership:• $5,760 per year (years one through five)• *$960 per membership, offered 6 times a year.
Maxim Innovations
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
Valuation of Company
Residual Value$16,093,533
NPV$9,093,533
Projected Sales Price$25,187,066
Maxim Innovations
Break Even (10% increase best case)
Projected Break-Even
$(10)
$(5)
$-
$5
$10
$15
$20
$25
$30
$35
1 2 3 4 5 6 7
Year
Inco
me
($ M
illi
ons)
Worst Case Best Case (10% increase) Expected Case
Maxim Innovations
Projected Income (10% sales increase)Projected Net Income
$(4)
$(2)
$-
$2
$4
$6
$8
$10
$12
1 2 3 4 5 6 7
Year
Inco
me
($ M
illio
ns)
Worst Case Best Case (10% increase) Expected Case
NPV = $14,419,233 IRR = 38%
Maxim Innovations
Sales Figures (Expected)YEAR 2008
# Stores
# boxes / month # boxes/ yr Total # boxes
GNC Stores 2529 5 60 151,740
Vitamin Shoppe 160 5 60 9,600
Vitamin Works 550 5 60 33,000
Whole Foods 193 4 48 9,264
World Gym 179 4 48 8,592
Gold's Gym 532 4 48 25,536
LA Fitness 400 5 60 24,000
Sports Clubs 135 4 48 6,480
Bally 367 4 48 17,616
Trader Joes 277 6 72 19,944
Total 5322 46 552 305,772
Maxim Innovations
Sales Figures (Expected Cont.)
Year 2009 (250% increase) 764,430Year 2010 (20% increase) 917,316Year 2011 (20% increase) 1,100,779Year 2012 (20% increase) 1,320,935Year 2013 (15% increase) 1,519,075Year 2014 (15% increase) 1,746,937
Maxim Innovations
Sales Forecast (Worst 10% decrease)
Year 2008 $275,195Year 2009 (250% increase) $687,987Year 2010 (20% increase) $825,584Year 2011 (20% increase) $990,701Year 2012 (20% increase) $1,188,842Year 2013 (15% increase) $1,367,168Year 2014 (15% increase) $1,572,243
Maxim Innovations
Sales Forecast (Best 5% increase)
Year 2008 $321,061Year 2009 (250% increase) $802,652Year 2010 (20% increase) $963,182Year 2011 (20% increase) $1,155,818Year 2012 (20% increase) $1,386,982Year 2013 (15% increase) $1,595,029Year 2014 (15% increase) $1,834,283
Maxim Innovations
Taxes (Expected)
2008 2009 2010 2011 2012 2013 2014
Earnings beforeTaxes $ (2,275,749) $ (342,301) $ 1,120,606 $ 4,182,971 $ 7,293,175 $ 10,069,046 $ 13,277,129
Tax Expense $ (773,755) $ (116,382) $ 381,006 $ 1,422,210 $ 2,479,680 $ 3,423,476 $ 4,514,224
NOL $ (773,755) $ (116,382) $ - $ - $ - $ - $ - Income TaxExpense $ - $ - $ 381,006 $ 1,422,210 $ 2,479,680 $ 3,423,476 $ 4,514,224
Total NOL $ (773,755) $ (890,137) $ (509,131) $ 913,079 $ - $ - $ -
Tax Payable $ - $ (773,755) $ (509,131) $ 913,079 $ 2,479,680 $ 3,423,476 $ 4,514,224
Maxim Innovations
Taxes (Worst Case)
2008 2009 2010 2011 2012 2013 2014
EBIT $ (2,684,659) $ (1,364,578) $ (106,125) $ 2,553,435 $ 5,337,732 $ 7,820,286
$ 10,691,055
Tax Exp $ (912,784) $ (463,957) $ (36,083) $ 868,168 $ 1,814,829 $ 2,658,897
$ 3,634,959
NOL $ (912,784) $ (463,957) $ (36,083) $ - $ - $ - $ -
Income Tax
Exp $ - $ - $ - $ 868,168 $ 1,814,829 $ 2,658,897
$ 3,634,959
Total NOL $ (912,784) $ (1,376,741) $ (1,376,741) $ (508,573) $ 1,306,256 $ -
$ -
Tax Pay $ - $ (912,784) $ (1,376,741) $ (508,573) $ 1,306,256 $ 2,658,897
$ 3,634,959
Maxim Innovations
Taxes (Best Case)
2008 2009 2010 2011 2012 2013 2014
Earnings before Taxes
$ (2,071,293) $ 168,837 $ 1,733,972 $ 4,997,739 $ 8,270,897 $ 11,194,721 $ 14,572,800
Tax Expense $ (704,240) $ 57,405 $ 589,551 $ 1,699,231 $ 2,812,105 $ 3,806,205 $ 4,954,752
NOL $ (704,240) $ - $ - $ - $ - $ - $ -
Income Tax Expense $ - $ 57,405 $ 589,551 $ 1,699,231 $ 2,812,105 $ 3,806,205 $ 4,954,752
Total NOL $ (704,240) $ (646,835) $ (57,285) $ 1,641,947 $ - $ - $ -
Tax Payable $ - $ (646,835) $ (57,285) $ 1,641,947 $ 2,812,105 $ 3,806,205 $ 4,954,752