Target Executives Believe That If They Raise Prices, Then Customers

question 301

Multiple Choice

Target executives believe that if they raise prices, then customers will switch to shopping at Walmart across the street. However, if they decrease their prices, then Walmart will respond by decreasing their own prices, with no customers switching from Walmart to Target. This scenario implies that

• A) Target should decrease its prices in an effort to drive Walmart out of business.
• B) prices charged by both retailers will be relatively stable.
• C) both retailers are locked in destructive competition.
• D) Target should not have a pricing strategy.

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Definitions:

Marketing Mix

The combination of factors that can be controlled by a company to influence consumers to purchase its products, traditionally identified as product, price, place, and promotion.

Market Share

The proportion of the overall sales in a market that a company, product, or brand secures.

Externally Focused Strategies

Business tactics that prioritize external market conditions and customer needs over internal considerations.

Internally Focused Strategies

Approaches within a business that concentrate on improving internal processes, resources, and capabilities to meet organizational goals and objectives.