A particular market was served by two products offered by Acme and a competitor.

The prices and quality ratings of the two products are as follows:

Price Quality rating Acme brand $2.00 50 Competitor brand $2.50 70 The two brands each have a 50% share of the market. Now Acme introduces a new product with a price of $2.20 and a quality rating of 30. What would you expect to happen in the market?12

a. The new product will grab a dominant share of the market.

b. The new product will split the market with the existing products into thirds.

c. The new product will not gain much market share, but Acme will increase market share at the expense of the competitor.

d. The new product will not gain much market share, but the competitor will gain market share at the expense of Acme.

e. The new product will not gain much market share, and the relative shares of Acme and the competitor will be unchanged.