PG Case Analysis

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Option 1: Base Case In the base case the following data was used to calculate NPV and IRR • • •

Sellin% Price .++ , Cost .2+, Sales 6ol#me +/illion Incremental Advertisin% .+/ Cannibali"ation 7 Premi#m 8 ))* , 9asic 8 2)* 

Option 2: Revenue concentrated • • •

Sellin% Price .+2, Cost .2+, Sales 6ol#me ;$+)/illion Incremental Advertisin% .;$)/ Cannibali"ation 7 Premi#m 8 ))* , 9asic 8 2)* 

Option 3: MinimizeCannibalization • • •

Sellin% Price .+2, Cost .2+, Sales vol#me 2/illion Incremental Advertisin% .2/ Cannibali"ation 7 Premi#m 8 0)* , 9asic 8 2)* 

NPV & RR:

NPV

OP!ON 1

OP!ON 2

OP!ON 3

3,30,!"3 #

%$$,&&,'&( #'!

)"%,%(&# '0*

RR

"&+

"$+

$+

Conclusion: ased on our anal-sis we conclude that .ption" )Re/enue dri/en* strateg- oers the highest NPV and IRR thus being the pro1ect with the 2ai2u2 /alue addition to the 4r2# 5he price decrease increases the sales /olu2e substantiall- which 2ore than 2a6es up for the loss of price#  5his strateg- also eecti/el- cancels out the cannibali7ation eect on other products, howe/er cannibali7ation is a 2atter that should be gi/en high attention

P a g e  | " to, since the rate is substantial )(0+ of New 8ales*# If countered and lowered eecti/el-, it can increase the pro1ects attracti/eness#