What market share at the increased retail price

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Crest brand of toothpaste by P&G is the #1 brand in a competitive and crowded toothpaste market in the USA. Crest enjoys 30% market share but the competition is on the increase and there is an ever increasing pressure on margins and profitability. The US toothpaste market is estimated as equivalent of 600 million, 6 oz tubes. The retail price of a Crest toothpaste tube of 6 oz is $2.97 at Walmart and other similar stores. The channel margin (distributors and retailers combined) is 40% on retail price and P&G makes unit contribution margin of 20% on its selling price to distributors. P&G could increase the retail price of Crest toothpaste by 10%. What market share at the increased retail price would yield the same total $ margin for the channel agents as compared to the scenario in which the price is not increased? Discuss implications of your results.

Reference no: EM13974564

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