Question

At great expense, you have created a new product with functionality and performance equal to existing...

At great expense, you have created a new product with functionality and performance equal to existing competitive products (no differentiation). There are many existing competitors in the market, so to gain entry you must drop your price below all the others. Your research shows the available market size is 15 million units annually and further indicates that your competitors are selling 14.999 million units annually. Was this a smart investment to develop such a product?

true or fal

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Answer #1

The answer is false. It was not a smart investment to develop such a product.

The product has been developed has no different features that can attract the customers and already a number of competitors existing in the market. To make a share in the market, price of the product has to be dropped which will reduce the profit rate also.

So there is no way with which this investment can give profitable returns to the producer. So the investment is not a smart investment.

It would have been a smart investment if the product would have been differentiated from the others present in tje market to attract the customers.

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