The vice president of the company thinks that Fizz should skip the tes

QUESTION

The vice president of the company thinks that Fizz should skip the test marketing step. Which of the following situations, if true, strengthens his argument?

A) The development costs and the risks involved are extremely high.
B) The new product will be substantially different than the ones already available in the market.
C) Though the CEO is keen on the new product, some members of the senior management are not at all convinced.
D) The company licenses an existing energy drink formula that has been successful.
E) The company’s previous product launch experiences indicate that there is a positive correlation between test marketing results and actual product sales.

ANSWER

Answer: D
Explanation: D) The test market step may be unnecessary if the initial costs of producing the new product are low or if the company has reason to be confident about the new product. Choice D suggests that Fizz has already had a successful experience with an energy drink, which supports the VP’s belief that test marketing is not needed. Choice A weakens the VP’s plan, as the time and expense of test marketing make more sense when development costs and risks are high, not low. Choice B is an argument for going through with test marketing, as the product is substantially different from others the company has marketed. Choice C only tells us that some managers aren’t convinced the product will succeed. If anything, test marketing would help convince those managers. Choice E indicates that test marketing is beneficial.