Question

Retail convergence most likely leads to ________.

A) reduced differentiation
B) reduced competition
C) increased sales
D) increased profit margins
E) reduced advertising costs

Answer 1

Retail convergence typically results in reduced differentiation as retailers focus on price and service, and products become more alike. This can impact profits and business survival, and underscores the role of advertising in product differentiation, which can affect profits and demand elasticity.

Step-by-step explanation:

Retail convergence most likely leads to reduced differentiation. This is because as retail markets become more consolidated, with fewer retailers dominating sales, the products and services offered tend to become more similar. This convergence leads to increased competition on price and service rather than on unique product features or innovations. However, reduced differentiation may not necessarily lead to increased profits or sales, as competition can reduce business profits and drive some firms out of business. Furthermore, effective advertising in a monopolistically competitive market can help firms differentiate their products and potentially increase profits by making the demand for their products less elastic or by increasing overall demand.