Regarding New-Product Development, Market Tests

question 118

Multiple Choice

Regarding new-product development, market tests:

• A) are used mostly for durable products because of their high production costs and risks.
• B) seek customer reactions to ideas-not actual products.
• C) should test the product and specific marketing mix variables.
• D) are not very costly, but take a long time to do.
• E) None of these alternatives is correct.

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Definitions:

Capital Structure

The mixture of debt and equity that a company uses to finance its operations and growth.

Tax Shield

The reduction in income taxes that result from taking a deductible expense, such as mortgage interest, which reduces taxable income.

Financial Distress Costs

Expenses that a company faces when it is having difficulty meeting its financial obligations, which can include legal, restructuring, and operational costs.

Debt-equity Ratio

The ratio highlighting the financial mix of equity and debt used in the acquisition of company assets.