YOUR TASK

Specify which sales outlet$($s$)$ should be opened for the quarter $2$ test market. Pay attention to the setup cost, which will have to be paid this quarter, and the lease cost, which will have to be paid each quarter in the future.

DECISION TIP

There are other concerns beyond potential market size to keep in mind as you open sales outlets:

Operating expenses: larger and more prosperous markets tend to have higher operating expenses.

Competition: early entrants will have the pioneering advantage of building unchallenged customer loyalty, but they pay a price in low initial sales due to a lack of customer awareness of the product category.