A firm seeking to satisfy the demand patterns of a small cluster in clustered demand is less likely to fall victim to the majority fallacy than a firm facing homogeneous demand.

Question

Quizplus · Accepted Answer

The majority fallacy occurs when a firm incorrectly assumes that targeting the largest market segment is the most profitable strategy. In clustered demand, where demand is segmented into smaller, distinct clusters, a firm is more focused on satisfying the specific needs of a smaller group, reducing the risk of overlooking smaller but potentially more profitable segments due to the allure of larger market segments.

A Firm Seeking to Satisfy the Demand Patterns of a Small