The new CEO of a struggling cell phone service provider is trying to revitalize the company by revamping its business strategy. The CEO surveys the current service provider market and sees that there are a few large companies with similar business models: customers are required to choose from a limited number of plans, and are then locked into those plans for at least two years by contract. In order to even enter into a contract with the service provider, the customer must have proof of a steady income and be able to pass a credit check. The CEO sees that many individuals in the 15 to 24-year-old age bracket cannot meet these standards and are not being served by the larger companies. She decides to make her company unique by offering no-contract, pay-as-you-go cell phone service. Customers do not need to pass a credit check or provide proof of income in order to sign up for service, and can discontinue service at any time.
According to this scenario and your knowledge of marketing strategies, which statement best explains the new CEO's actions?
A) The CEO felt sorry for people with bad credit because other cell phone companies were not meeting their needs, so she decided to create a company that did.
B) The CEO decided to create a unique business plan even though it would not meet the needs of the majority of the population, just so that her company would stand out.
C) The CEO created a business plan that would target the low-income market, knowing she could take advantage of the fact that other companies require proof of income.
D) The CEO wanted to make an alternative cell phone service available for indecisive people who disliked the contracts and plan choices required by other companies.
E) The CEO realized that the youth segment of the market was not being served and decided to fill that niche in the business by creating a business plan that targeted it.
Correct Answer:
Verified
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