Mr. Monk, tired of selling World War I era merchandise for years, is currently thinking of entering the breakfast cereals market in North Jersey with a new brand called Mr. Monk. Mr. Monk has estimated brand awareness to be approximately 90%, because the brand will enjoy high local TV and point-of-purchase promotion budgets. For manufacturing and marketing, Mr. Monk would have to spend $10 million towards fixed costs. Just one supermarket chain, which alone sells 35% of total breakfast cereals sold in the target market, will carry the brand. According to Mr. Monk, this brand, to be priced at $0.75 for a half-lb. pack, will sell enough to carry his company out of the red. An MR agency appointed by Mr. Monk has contacted a sample of households to get `intention to buy' information for the brand. The agency reports that, given 100% awareness and availability, the percentage of respondent households who have given different ratings for `intention to buy' on a 10-point scale (ranging from 0 = `would definitely not buy' to 10 = `would definitely buy') is given as follows:

Response on 0-10 scale	Percent of responses
1	25
2	20
3	18
5	26
8	11

Mr. Monk's cost accountant reports that the variable cost for 1 lb. of the cereal comes to $1.05. If the target market in North Jersey consists of 100,000 households each buying a half-lb. pack per two weeks, answer the following questions:

1) What demand would you project for Mr. Monk for the current year?

2) Do you think Mr. Monk will sell enough to break even? Should he introduce his namesake cereal brand in California?

Justify your answers with suitable calculations. (assume there are only 24 fortnights in the year)

Answer rating: 100% (QA)

To project the demand for Mr Monks cereal brand we can use the provided data on the percentage of households that have given different ratings for int... View the full answer