Test markets are a means of estimating a product's market potential.

Question

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Test markets are designed to help companies gauge consumer interest and demand for a new product in a controlled setting before launching it to the broader market. By testing the product in a limited geographic area, companies can gather important information on how the product is perceived, how it performs, and what sales potential it might have. Based on these findings, companies can make informed decisions about how to proceed with the product's development and marketing.

Test Markets Are a Means of Estimating a Product's Market