CLEP Principles of Marketing Exam Prep

Category - Business Operations

A jewelry store has operated in a small town for over 30 years and has always turned a reasonable profit without resorting to sales or other types of marketing promotions. Which of the following events would most likely cause store managers to rethink this strategy and significantly increase the amount of resources allocated to promoting the store's products?
  1. Store managers are planning to renovate the store and add better lighting and new display cabinets.
  2. Price increases for several types of precious stones make it unfeasible for the store to carry certain items.
  3. Store managers expect that short-term demand for the store's products will increase.
  4. An outlet for a discount chain of jewelry stores has opened up in a neighboring town.
Explanation
Correct Response: D. Of the responses listed, the introduction of a discount jewelry outlet in a nearby town represents significant competition and is likely to have the greatest effect on the store's marketing strategy. The small store can expect price competition and product competition, and will need to rethink how they price and promote their goods to maintain their customer base and sales. A store renovation may attract some new customers and provide better product display, but it will not require a significantly new strategy (A). If the store cannot carry certain high-end items due to price increases then it doesn't cater to the high-end market niche, so this change will have little effect on their strategy (B). An increase in short-term demand may require that the store boost inventory of some products, but it will not require a new promotional strategy (C).
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