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Break-even on a new flavor, with cannibalization
The prompt
An Indian snack brand sells about 500 million packs a year across its flavors. Launching a new masala flavor costs INR 50 million one time (INR 5 crore, since 1 crore is 10 million), for recipe work, packaging, and launch advertising. Each pack contributes INR 4 (price minus variable cost). Past launches reached about 3 percent of brand volume in their first year. The chart below shows where research says the new flavor's sales would come from. Should it launch?
Your interviewer will share data as you ask for it. Ask clarifying questions, state a hypothesis, then lay out your structure out loud before you calculate.
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