Assume the company expects to sell 5 million packages ofPop-Tarts Gone Nutty! in the first year after introductionglobally, but expects that 80 per cent of those sales willcome from buyers who would normally purchase existingPop-Tart flavours (that is, they will be cannibalised sales).Assuming the sales of regular Pop-Tarts are normally 300million packs per year and that the company will incur anincrease in fixed costs of €500,000 during the first year tolaunch Gone Nutty!, will the new product be profitable for the company? Refer to the discussion of cannibalisa-tion in Appendix 2: Marketing by the Numbers for an ex-planation regarding how to conduct the analysis

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Assume the company expects to sell 5 million packages of
Pop-Tarts Gone Nutty! in the first year after introduction
globally, but expects that 80 per cent of those sales will
come from buyers who would normally purchase existing
Pop-Tart flavours (that is, they will be cannibalised sales).
Assuming the sales of regular Pop-Tarts are normally 300
million packs per year and that the company will incur an
increase in fixed costs of €500,000 during the first year to
launch Gone Nutty!, will the new product be profitable

for the company? Refer to the discussion of cannibalisa-
tion in Appendix 2: Marketing by the Numbers for an ex-
planation regarding how to conduct the analysis

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