Question

2. A manufacturer conducts a concept test to predict market share for a new product. The product will only be introduced if first-year market share is expected to be at least 10%. Assume "preference" is a good predictor of market share. Any market share below 10% by the end of year 1 would be disastrous for the company. The product is tested against 2 existing, in-market products, with a sample of 200 consumers. 25 of them preferred this new product over the existing one. Should the product be introduced?

Answer 1

Answer:

Yes, the product should be introduced.

Explanation:

Expected market share = 10%

Market share obtained from the text = 25 / 200 = 0.1250, or 12.50%

Since the market share of 12.50% obtained from the concept test is greater than the 10% expected market share, the product should be introduced.