Pharmalodiagnosticon, an up and coming pharmaceutical company, is thinking of introducing a new product, Sweet Relief, into the crowded OTC market for pain relievers.

Its average retail price is set to be about ten dollars for a bottle of 250 caplets. The retailer's margin is 30%. It will cost Pharmalodiagnosticon $1 a bottle for the key ingredient (aspirin), another $0.50 a bottle for the sugar coating, and another $0.50 for packaging. In addition to this, Pharmalodiagnosticon has several other major expenditures. They have already spent $750,000 on R&D and $250,000 on various legal fees developing the product. Going forward, these expenses will be reduced to a total of $100,000 per year.

Also, marketing the new drug will require annual expenditures on selling and advertising. For the first year, Pharmalodiagnosticon plans to spend $2,000,000 on TV advertising during ""The Price is Right,"" and ""Wheel of Fortune"", $500,000 in several newspaper ads and $900,000 on bus stop posters. The sales force expense allocated to Sweet Relief will be $500,000.