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Trend research indicates that more and more consumers care about health and wellness. Accordingly, Hershey s is looking into launching a low - calorie version

Trend research indicates that more and more consumers care about health and wellness. Accordingly, Hersheys is looking into launching a low-calorie version made with the natural sweetener, Stevia. The new bar will be called Hersheys Lite, and will be available for sale to consumers at the same $1.50 price point as regular Hersheys. Retailers have agreed to work on the same margins as the regular Hersheys bars. However, it will cost the company $0.55 to manufacture each bar of Hersheys Lite due to the more costly natural ingredients. The company will offer a $.25 coupon on the Lite bars, similar to that offered with regular Hersheys bars and expects similar redemption rates. Preliminary forecasts indicate that the company will sell 6 million Hersheys Lite bars annually; however, 50% of these sales will come from the cannibalization of an equal number of the regular Hersheys brand. In order to drive awareness and purchase of Hersheys Lite, you plan to spend $17 million instead of the normal $15 million. Based purely on the economics, would you advise
management to launch the new Hersheys Lite bar?

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