1. While each of the existingCrianzaand Pronto cars sell for $17,500 each, the analysts believe the new trendyAloftacould sell well at a $27,500 price point. TheEgregiaResearch Department projects that sales of the new hybrid will reach 20,000 units in the first year. One half of those first-yearAloftasales would cannibalize sales from the other twoEgregiaproducts (60% from the sedan and 40% from the hatchback). The other half of theAloftasales would be new sales or stolen from established hybrid automobiles from other manufacturers. Unit variable cost of theCrianzais $12,500, and $13,500 per unit for the Pronto. Unit variable costs for the newAloftaare projected to reach $19,500 because of the unfamiliar technology that provides its special performance parameters. Next year's original forecast sales ofCrianzawere 35,000 units (without the entrance ofAlofta), and 30,000 units for the Pronto (without the entrance ofAlofta). Analysts project additional fixed costs for the proposedAloftarolloutwould reach $115 million for the first year, because of new plant and equipment, etc. R&D has begun cannibalization analysis below.Finish the work(and SHOW ALL WORK for full credit) and discuss whether theAloftaproject is economically viable.

1. Explain how each of the marketing mix decision areas, as well as market segmentation and target marketing, could provide context and influence the outcome of the calculation you have made.

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