The owners of the gift shop are considering which market segment and product lines should be the focus of their attention and limited resources. This is an especially critical decision because of there is limited space in the store and additional fixtures will be needed to carry the new lines of collectible that are coming soon. 1. Which product-market combination has the greatest potential?
A small gift shop recently celebrated its 30th anniversary. Over the last 30 years, the owners have continually changed the products they carry to satisfy market demand. Early on, the store primarily sold figurines and Department 56 collectibles, but now the store carries a more diverse mix of merchandise that includes fashion items like Vera Bradley purses and Pura Vida bracelets in addition to the Department 56 collectible lines.
The demographics of the store's market seem to be changing. There has been an influx of younger customers (20s and 30s) into the area, which has brought the average age of their customer down by 9.8 years. The younger group has now passed the older segment in terms of size. This rapidly growing segment doesn't seem interested in buying the same collectibles that their parents bought. Additionally, many older residents (60s and 70s) have been leaving the area for retirement. The older customers are fewer collectibles but are also buying gifts for children and grandchildren. Sales of merchandise aimed at the younger customers have grown 30 percent, but sales of merchandise targeted at the older crowd have been flat or declining. However, collectible sales have always been the store’s bread and butter. There is competition in the local market, but this gift shop has an exclusive on the Vera Bradley line, which has been popular with the younger customers.
The owners of the gift shop are considering which market segment and product lines should be the focus of their attention and limited resources. This is an especially critical decision because of there is limited space in the store and additional fixtures will be needed to carry the new lines of collectible that are coming soon.
1. Which product-market combination has the greatest potential?
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