Scenario 6-4 Jay and Carrie Garrett Operate a Small Retail Store in Store

question 97

Multiple Choice

Scenario 6-4
Jay and Carrie Garrett operate a small retail store in a college town that sells only house plants and accessories, which they named The Plantatarium.Their initial feeling when they went into business was that virtually everyone was a potential customer for house plants.Subsequent market research conducted for them painted a different picture.This research identified three particularly strong market segments.The first was college students ages 18-24.The next segment was retired seniors ages 65-80.The third segment was professional offices for doctors, accountants, and lawyers.The college students liked houseplants because they dressed up their living spaces.The senior liked them because they became the focus of a hobby.The professionals did not buy them for any reason other than décor.
-(Scenario 6-4) Several customers have mentioned that they would like to browse through several varieties of cactus, so the Garretts decided to devote a small corner exclusively to cacti.These customers constitute an example of

• A)market niche.
• B)psychographic segmentation.
• C)brand loyalty.
• D)demographic segmentation.

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Definitions:

Economies of Scale

The cost advantage that arises with increased output of a product due to spreading fixed costs over more units of production.

Minimum Efficient Scale

The smallest level of production a firm can achieve while still taking full advantage of economies of scale regarding costs per unit.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, leading to a reduction in average costs with increased output.