The costs we have incurred to develop a smartphone application for our company's Qoop product has far exceeded the costs to develop our web platform and the mobile-friendly version of our website. The returns, thus far, do not even come close to recouping our initial investment. We should cap next year's marketing budget for Qoop at $100K. If user adoption for Qoop does not increase to a level that would result in conversion in sales that would, in 2-3 years, result in a modest profit, we should stop the project, cut our losses, and focus on developing another product.
Our innovative application still hasn't gained attention from media. As with all types of product launches these days, we need to get the word out fast and get this product to go viral. I recommend a marketing budget closer to $400K. This will allow us to use some big name celebrities to help us get the word out on television, in magazines, and even through social networks like Facebook and Twitter. Once we get over the hump, further expense will be neglible as marketing will be largely free and will occur through word of mouth. Without strong celebrity promotion from the very beginning, the product launch will fizzle away and die unspectacularly - we'll never recoup our largest product development cost. For anything to go viral, it must have a cool factor, be funny, and be useful. A big name celebrity can help us get over that hump.
Qoop helps complement our existing product offering. While Qoop expenses have been our largest product development cost, the cost should also be shared among the low costs of our other products. In addition, no product should be looked at as a standalone product. It's more important for us to grow our market share and gain competitive advantage in our industry. To do this, we have to launch more products and start generating a portfolio of products to match our big competitors. We should be marketing all of our products alongside Qoop and not just pigeonhole ourselves to promoting just one product whenever we access the TV or social media marketing channels.
For each of the following statements, select Inferable if the statement is reasonably inferable from the information provided. Otherwise, select Not Inferable.
Only the company founder would be interested in launching new products in the next year
All three executives believe that the development costs for Qoop have been above the average for the company's other products.
Less than $100,000 has been spent on marketing Qoop in the current year.
Sorry.Stuck on this question? Leave comments below.
You are not logged in. Login here to keep track of your progress.
Looking for the latest Official Guide to the GMAT 2018?
Post your thought process and respond to others' questions below. Download the FREE "GMAT PILL HD" app for iPad, iPhone, and Android device. Remember to rate!
Sign up for the GMATPill Video Course covering SC, CR, RC, PS, DS and IR.
OG Tracker | MBA PILL | Taking the GMAT