In a competitive market analysis of a gift shop, which segment is most likely to indicate the weakest competitive position for the shop?

• A. The segment with the lowest price sensitivity among customers
• B. The segment with exclusive products not found elsewhere
• C. The segment with the most loyal repeat customers
• D. The segment with the highest number of alternative gift shops nearby

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the concept of competitive position in a market. A firm's competitive position is stronger when it has unique advantages such as loyal customers, exclusive products, or low price sensitivity among its customers.
2. Step 2: Analyze the meaning of price sensitivity. Customers with low price sensitivity are less likely to switch to competitors when prices change, which strengthens the shop's position in that segment.
3. Step 3: Consider the impact of exclusive products. Offering products not found elsewhere creates a unique selling proposition, reducing direct competition and improving the shop's competitive position.
4. Step 4: Evaluate customer loyalty. Loyal repeat customers indicate a stable demand base and reduce the threat of competitors, enhancing the shop's competitive position.
5. Step 5: Assess the effect of having many alternative gift shops nearby. A high number of alternatives increases competition and makes it easier for customers to switch, indicating a weaker competitive position in that segment.