Should smart devices conduct customer segment research

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Reference no: EM133290857

Question: Smart Devices has a new smartphone ready to market. If the product goes directly to the market, there is a 50 percent chance of success. Alternatively, Smart Devices can spend $2 million immediately and delay the launch by one year to conduct customer segment research. By going through research, Smart Devices will be able to better potential target customers and will increase the probability of success to 80 percent. If successful, the PV of the cash flows (when the smartphone is brought to market) is $20 million. If unsuccessful, the PV of the cash flows is only $5 million. The appropriate discount rate is 10 percent. Should Smart Devices conduct customer segment research or go directly to the market?

Reference no: EM133290857

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