Question: Fruity Stones is considering introducing a variation of its current
Fruity Stones is considering introducing a variation of its current breakfast cereal, Jolt 'n Stones. This new cereal will be similar to the old with the exception that it will contain more sugar in the form of small pebbles. The new cereal will be called Stones 'n Stuff. It is estimated that the sales for the new cereal will be $100 million; however, 40 percent of those sales will be from former Fruity Stones customers who have switched to Stones 'n Stuff. These former customers will be lost regardless of whether the new product is offered because this is the amount of sales the firm expects to lose to a competitor product that is going to be introduced at about the same time. What is the relevant sales level to consider when deciding whether or not to introduce Stones 'n Stuff?
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