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 gross profit 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