Question
DuPont currently offers 2 specialty kinds of plastics, Premium and General Purpose. Data for the two products is as follows: Product Annual sales volume (tons)
DuPont currently offers 2 specialty kinds of plastics, Premium and General Purpose. Data for the two products is as follows:
Product
Annual sales volume (tons)
Annual sales revenue
COGS
Premium
250,000
$30,000,000
$15,000,000
General
1,000,000
$60,000,000
$25,000,000
Dupont is planning on introducing an economy product at a price of $30/ton and variable costs (COGS) of $15.5/ton. Assume that cannibalization will occur proportionately to the current products volume share. Also, assume that the new product has zero fixed costs. What is the breakeven cannibalization rate?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Advertising and Promotion An Integrated Marketing Communications Perspective
Authors: George Belch, Michael Belch
10th Edition
78028973, 978-0078028977
