8-14 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 cannibalisation in Appendix 2: Marketing by the Numbers for an explanation regarding how to conduct the analysis (AACSB:

Communication; Analytical reasoning). pg98