When Wal-Mart Decides to Build a New Retail Store in a Town

question 248

Multiple Choice

When Wal-Mart decides to build a new retail store in a town, it will decide to build a large store rather than a small store if the large store is expected to earn a greater economic profit. What other motive would Wal-Mart have for choosing to build a large store?

• A) A larger store will help Wal-Mart maintain its position as the leading retail company in the world more than a smaller store would.
• B) A larger store will give Wal-Mart greater political influence in the community.
• C) A larger store may deter entry into the town by a rival firm.
• D) Because of economies of scale, the average total cost of production is less for a larger store than a smaller store.

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Definitions:

Differentiated Targeting Strategy

A marketing approach where a business targets several market segments with tailored products or services for each.

Developing

Refers to the process of improving the growth or value of something through careful planning and sustained effort.

Marketing

The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Undifferentiated Targeting Strategy

A marketing approach where a company decides to ignore market segment differences and appeal to the whole market with one offer or product.