Assuming no competitive response and that the price cut, Ask an Expert

Management Studies

John's company currently has a 40% share of a 1 million unit market. The current price for his product is $100, but in a direct attempt to gain market share from a competitor, he is considering lowering the price of his company's product by 10% in an attempt to increase market share to 50%. Marketing expenses and cost per unit will remain at the level of 15% of sales and $70, respectively.

Assuming no competitive response and that the price cut resulted in a market share increase to 50%, what would the impact be on net marketing contribution as a result of this action? Show your work.

a) an increase of 12.5%

b) a decrease of 20%

c) a decrease of 17%

d) no net change in net marketing contribution

e) not enough information to determine the impact on net marketing contribution

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M9100968

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