Multiple Choice
In a competitive market, Orchid is deciding between four production tiles, each with different costs. Which tile should Orchid choose to minimize costs?
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3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
In a competitive market, why might a business choose to use a shallow product mix?
A
To offer a wide variety of products to attract more customers
B
To reduce competition by entering multiple market segments
C
To increase the complexity of inventory management
D
To focus resources on a few products and achieve greater efficiency
Verified step by step guidance1
Understand the concept of a product mix: It refers to the total range of products that a business offers to its customers. The product mix can be broad (many different product lines) or narrow, and deep (many variations of a product) or shallow.
Define a shallow product mix: This means the business offers only a few variations or options within each product line, focusing on a limited number of products rather than many variations.
Consider the implications of a shallow product mix in a competitive market: By focusing on fewer products, the business can allocate its resources more efficiently, such as production, marketing, and inventory management.
Recognize that focusing resources on a few products can lead to greater operational efficiency, cost savings, and potentially higher quality or better customer service for those products.
Conclude that a business might choose a shallow product mix to concentrate efforts and resources on a limited range of products, which helps achieve greater efficiency rather than trying to attract more customers with a wide variety or increasing complexity.
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