Scenario 1

question 98

Multiple Choice

Scenario 1.2 Use the following to answer the questions.
Paws and Claws Hotel is a full service pet salon and boarding kennel. Paws and Claws has an interactive website where customers can directly book a grooming appointment, obedience class, or overnight accommodations for their dog or cat. Paws and Claws has several unexpected services, such as a 600-square-foot swimming pool, complete with slide and dog-friendly graduated steps to help them exit the pool. Customers can also drop their dog or cat off each morning for pet day care. Paws and Claws has a pick-up and delivery service, webcams in every kennel so that pet families can view their pets while away, and pet "furniture" so that the cats and dogs can lie on sofas just like at home. Paws and Claws is also open 24 hours a day, 365 days each year so that customers can pick up their pet at any time.
The cost for an overnight stay at Paws and Claws averages $50, compared to competing kennels at about $30. The day care costs are $25 for either a dog or cat. The majority of Paws and Claws' competitors don't offer the day care service, and require a two-day minimum for overnight stays.
Informal discussions with customers led to the addition of pet day care and 24-hour hours of operation. Previously, Paws and Claws was more interested in competing based on its prices.
Refer to Scenario 1.2. Paws and Claws' target market is most likely to be which of the following?

• A) The dogs and cats who stay there
• B) Pet owners who go on vacation a few times a year
• C) Families with small children and several pets
• D) Suburban families with two-income households
• E) Urban professionals who travel often

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Definitions:

Market

A place or system in which commercial transactions occur between buyers and sellers for goods, services, or financial assets.

Herfindahl-Hirschman Index

A measure of market concentration that is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers.

Squared Market Shares

A measure used in the analysis of market concentration, calculating each firm's market share squared and summing them to assess competitive environments.

Industry

An industry is a group of companies that operate in a specific sector of the economy, often producing similar goods or services.