Originally, homemakers used cotton and linen dish-cloths in their kitchens. A paper company, looking for new markets developed paper towels. This development crystallized a latent market, and other manufacturers entered. Overcapacity led one manufacturer to create absorbent towels. Competitors again copied the product and the market was soon full with the product. The same happened again and again. Starting with one product the towel market evolved into one with various absorbencies, strengths and applications. This is an example of ________.

Question

Quizplus · Accepted Answer

This scenario is an example of market fragmentation, where a market evolves from offering a single product to a variety of products with different features, such as absorbencies, strengths, and applications, due to competition and innovation.

Originally, Homemakers Used Cotton and Linen Dish-Cloths in Their Kitchens