Which of the following, if true, weakens the argument for the introduction of a Fizz energy drink?

Question

A) The other players in the energy drink market have long-term contracts with raw material suppliers.
B) The demand for carbonated drinks has experienced a steady decline over the past few years.
C) Unsteady input costs have forced existing players to adopt a guarded approach to pricing.
D) It will take longer for Fizz to recoup its R&D investment than it did to recoup the R&D costs for the fruit drinks.
E) Studies indicate that a growing number of consumers perceive energy drink claims as false.

Answer 1

Answer: E
Explanation: E) Fizz would enter the energy drink market if there were a reasonable expectation of success and if the market were valuable enough to justify the cost of entering it. Choice E questions the value of the market, indicating that fewer and fewer people believe the claims made by energy drinks. A shrinking market is a strong argument against entering that market with an unknown and untested product. Choice A does not add much value to the argument. There is no reason to believe that Fizz wouldn't also enter into such contracts. Choice B applies to carbonated drinks, not energy drinks. Choice C applies to all players in the industry. Choice D does not necessarily weaken the case for introducing an energy drink, as different products are expected to have different payback periods. Also, we don't know how long it took Fizz to recoup the R&D costs of the fruit drinks.