The MacFarlane Chocolate Company has a product called Snackers in the health-food segment of the candy bar market. Each Snackers bar contains 150 grams of protein and 150 calories. The two rival products are Healthnut bars, containing 200 grams of protein and only 100 calo¬ ries, and Hi-energy bars, containing 50 grams of protein and 200 calories. Each of these bars weighs 4 ounces. Snackers bars sell for $1.75, compared to $2 for Healthnut bars and $1.50 for Hi-energy bars.

Recently the cost of peanuts and chocolate has been increasing while the cost of sugar has been falling substantially. As a consequence, MacFarlane’s management is considering chang¬ ing the composition of Snackers to include less protein and more calories. In effect they are considering repositioning their product in the market. The proposal being considered is to make Snackers contain only 100 grams of protein but raise the caloric content to 200. The price would stay the same, but promotional efforts would stress the extra energy packed into the Snackers bar. Market research indicates that the typical customer spends $10 weekly on these so-called health-food bars.

With the current Snackers bar, MacFarlane has about 30 percent of the market. Healthnut has 25 percent, and Hi-energy has the remaining 45 percent. The protagonists of the new bar argue that the new Snackers bar will steal sales from Hi-energy bars. The antagonists argue that it will lose more sales to the Healthnut bar than it will gain from the Hi-energy bar.

(a) Using attribute analysis, show how the Snackers bar would be repositioned in nutrient- calorie space, and how this would change the efficiency frontier for the typical consumer.

(b) Given the current market-share information, advise management whether or not to reposi¬ tion the Snackers bar. Do you have any other suggestions?

(c) State all assumptions and reservations underlying your conclusion.