In order for a new business to be competitive in the market,it must often offer lower prices than its more established rivals.The business may cut services or offer fewer services so that it can offer these reduced prices while maintaining a profit margin.As the business becomes more established and its older rivals are put out of business,it can begin to offer more services and raise its prices. Which of the following concepts does the paragraph best illustrate?

Question

In order for a new business to be competitive in the market,it must often offer lower prices than its more established rivals.The business may cut services or offer fewer services so that it can offer these reduced prices while maintaining a profit margin.As the business becomes more established and its older rivals are put out of business,it can begin to offer more services and raise its prices. Which of the following concepts does the paragraph best illustrate?​

Quizplus · Accepted Answer

The paragraph best illustrates the concept of the wheel of retailing, which refers to the cycle of retail innovation where new entrants in the market initially offer low-priced, low-service models, which eventually evolve to become full-service retailers with higher prices, only to be replaced by new low-priced, low-service retailers. The concept of cutting services and offering reduced prices to maintain a profit margin is characteristic of the entry phase of the wheel of retailing, while the eventual offering of more services and raising of prices is associated with the trading up phase.

In Order for a New Business to Be Competitive in the Market,it