Pisa Pizza, a seller of frozen pizza, is considering introducing a healthier ver
ID: 2790409 • Letter: P
Question
Pisa Pizza, a seller of frozen pizza, is considering introducing a healthier version of its pizza that will be low in cholesterol and contain no trans fats. The firm expects that sales of the new pizza will be $22 million per year. While many of these sales will be to new customers Pisa Pizza estimates that 46% will come from customers who switch to the new, health er pizza instead of buying the onginal version a. Assume customers will spend the same amount on either version. What level of incremental sales is associated with introducing the new pizza? b. Suppose that 54% of the customers who will switch from Pisa Pizza's original pizza to its healthier pizza will switch to another brand if Pisa Pizza does not introduce a healthier pizza. What level of incremental sales is associated with introducing the new pizza in this case? a. Assume customers will spend the same amount on either version. What level of incremental sales is associated with introducing the new pizza? The incremental sales associated with introducing the new pizza will be Smillion. (Round to two decimal places.)Explanation / Answer
a 46% 54% Total Old Customer New Customer Sales of New Pizza 2,20,00,000 1,01,20,000 1,18,80,000 Incremental Sales associated with introducting the new Pizza will be 11.88 Million b 54% of the old customer 10120000*54% 54,64,800 Add: New Customer 1,18,80,000 Incremental Sales 1,73,44,800 or 17.3448 Million