The offer to Joint Juice Inc. by both Albertsons, the nation’s second largest grocery chain, and Safeway, the second largest grocery chain to sell Joint Juice’s products through their nationwide chain stores posed a challenging decision to the company. To sell its products throughout the nation is no doubt a great opportunity for Joint Juice, particularly as a start-up business. However, this offer challenged the company’s original strategy of staying regional for several more years and learning while growing. The management of Joint Juice was faced with making a critical decision - whether to stay with its established plan, or accept the offer to go national.
Joint Juice invented a product that deliver the nutritional supplement glucosamine, providing a beneficial effect on joint pain. Joint Juice was the only product in the form of beverage on the market. It had an advantage over the solid pills containing glucosamine by integrating fruit flavor to mask the bitter tasting of the key ingredients, as well as over orange juice by providing the function of joint pain relief besides containing energy and daily dose of vitamin C. All these aspects indicated that Joint Juice was a unique product on the market. With regard to the market capacity, the U.S. dietary supplement market was estimated to be $10.3 billion in 2002. The category to which Joint Juice belonged to would experience the fastest growth from 2002 to 2007, primarily driven by sales of glucosamine. Therefore, the market was very prospective. But Joint Juice had a difficult experience in growing its business and market share.
In the first quarter of 2002, Joint Juice gained total sales revenue of $129,333, and gross margin 53%. Disappointedly, it ended up with a net loss of $509,173 in this period. Its Income Statement (Exhibit 11 in the case) indicated that the company spent a lot promoting its. The total sales and marketing expense was $296,482, accounting for 229% of the total gross...
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