Case study: GoodBite is interested in selling a new form of teeth whitening strips. They dissolve in your mouth and leave less of a gunky residue feeling than current competitors' products do. Whitestrips seem to appeal to people 20-29 years old. Competitors' data on existing strips suggest they appeal to women slightly more than men, but, for the moment, GoodBite is not planning on differentiating on gender in the advertising. So let's ignore gender and just consider that 20-29 year old age category. Say the U.S. population is 301 mm, with 41.1 mm in the target age bracket. About 7.5 mm people have tried competitors' whitestrips (GoodBite isn't on the market yet), and roughly 3 mm of them are semiserious, frequent users. GoodBite is trying to guesstimate the size of its target market and its likely profitability. The GoodBite product is sold in packages of 14 sets of strips (each set is an upper and lower pair) in each box. GoodBite isn't sure of the frequency with which a typical purchaser will buy a set yet because the product category is still relatively new. However, they reason that an upper bound would be about 26 boxes bought by a consumer a year (52 weeks in the year, divided by the two weeks' supply that is sold in each box). A more conservative estimate would halve that (13 boxes; roughly one bought each month). A more conservative estimate still would be that a customer buys "a few" (two or three) boxes a year. GoodBite expects to charge $25 per box. Questions: -Should they launch GoodBites? -What assumptions were made that might be revisited?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Case study: GoodBite is interested in selling a new form of teeth whitening strips. They dissolve in your mouth and leave less of a gunky residue feeling than current competitors' products do. Whitestrips seem to appeal to people 20-29 years old. Competitors' data on existing strips suggest they appeal to women slightly more than men, but, for the moment, GoodBite is not planning on differentiating on gender in the advertising. So let's ignore gender and just consider that 20-29 year old age category. Say the U.S. population is 301 mm, with 41.1 mm in the target age bracket. About 7.5 mm people have tried competitors' whitestrips (GoodBite isn't on the market yet), and roughly 3 mm of them are semiserious, frequent users. GoodBite is trying to guesstimate the size of its target market and its likely profitability. The GoodBite product is sold in packages of 14 sets of strips (each set is an upper and lower pair) in each box. GoodBite isn't sure of the frequency with which a typical purchaser will buy a set yet because the product category is still relatively new. However, they reason that an upper bound would be about 26 boxes bought by a consumer a year (52 weeks in the year, divided by the two weeks' supply that is sold in each box). A more conservative estimate would halve that (13 boxes; roughly one bought each month). A more conservative estimate still would be that a customer buys "a few" (two or three) boxes a year. GoodBite expects to charge $25 per box. Questions: -Should they launch GoodBites? -What assumptions were made that might be revisited?

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Step 1

To assess whether GoodBite should launch its new teeth whitening strips, we need to estimate the size of the target market and the potential profitability of the product.

First, let's estimate the size of the target market in the 20-29 age bracket, which is 41.1 million people. Among them, 7.5 million people have tried competitors' whitestrips, and 3 million of them are semiserious, frequent users. This suggests that there is a significant market for teeth whitening products in this age group.

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