Thanks for the hints. I think I found where I was confused. In this model we assuming that the volume of products remains constant. In doing this, the total market value will actually decrease. That was confusing for me, because I would have assumed the opposite. •The BFC market share *could* have increased by 3% as a result of putting another 3M cans on the market, OR it *could* have grown 3% as a result of taking over competitors production. In this case, we are assuming it takes over production...although I am not sure the problem explicitly said this. •The difference between my answers and the ones presented indicates that a 3% increase in market share would result in $129M rather than $114M. The difference between these is $15M. Divide this by 3M cans, and you get $5, which is the difference in price between the market average and what we recommend they bid. Voila.

(editiert)

Hi Nikolas, exactly, in order not to make the calculation even more complicated, no market growth over this one year is assumed. However, it is described that BabyformulaCo is provided shelf space (from competitors), and the client thus sells more, resulting in a higher market share. Moreover, you are absolutely right about the $5 calculation as a cross-check.

(editiert)

Hi, thanks for explaining. I understand this logic here, but one thing i don't understand- why do we need to get the 5.16m units? It seems to me that if we know the share is 33% and the market size is fixed at $4.3bn, i will j multiply them out, and that could be reasonable too.

Hi Jade, Thank you very much for this question. I would be happy to share the solution to it: Since you want to understand the additional revenues generated, simply multiplying the new market share and market size will not get you to the desired results. Moreover, you also need to consider the 3m cans sold through the WIC program. If you would like a more detailed discussion on the question at hand, please don't hesitate to contact me directly. Best, Hagen