Large competitors are often viewed as a major.threat for startups and small companies; big.companies have more financial resources and greater.scale, market power and brand awareness than.smaller ones. However, our research finds that a.smaller brand can actually benefit if consumers can.see the competitive threat it faces from a larger.organization..When a U.S.-based ice cream chain with about 1,400 stores moved within 50 steps of a J.P. Licks ice.cream store in Newton, Massachusetts, some people.expected that J.P. Licks, a small, locally owned.company, would be beaten out of the Newton market..But consumers rallied around J.P. Licks, and the.national chain later closed its nearby location. When.the owner of the Los Angeles-based coffee store chain.The Coffee Bean & Tea Leaf could not stop a large.coffee shop chain from moving in next door, he was.surprised to see his sales shoot up—so much so that.he started proactively colocating new stores next to.large chain ones..These examples are not anomalies. In six lab and.field studies, we explored the effects of having a large,.dominant competitor and found that highlighting a.large competitor’s size and close proximity can help.smaller brands, instead of harming them. Compared.to when they are in competition with brands that are.similar to them in size or when consumers view them.outside of a competitive context, small brands see.consumer support go up when they are faced with a.competitive threat from large brands. This support.translates into higher purchase intention, more.purchases and more favorable online reviews..As part of our research, we conducted a field study.at an independent bookstore in Cambridge,.Massachusetts. Upon entering the bookstore, 163.prospective shoppers were exposed to one of three.versions of an in-store ad, emphasizing either the.store’s large competitors, small competitors or no.competition. Shoppers who read the “large.competitors” version were told that the store’s main.competitors are large corporations that have the.ability to put small businesses such as this bookstore.out of business. The “small competitors” version.indicated the store’s main competitors are other.locally owned small bookstores in Cambridge. In the.“no competition” version, participants were given no.information about the competitive environment..Shoppers were then given a $5 coupon, coded with.the in-store ad version they read. Analyzing.shoppers’ sales receipts and the number of redeemed.coupons, we found that shoppers were significantly.more likely to make a purchase after reading the.“large competitors” version of the in-store ad,.compared to the “small competitors” version or the.“no competition” version. They also purchased more.items and spent more money at the store, compared.to shoppers reading the “small competitors” or “no.competition” versions. These results suggest that.framing the competitive game and emphasizing a.competitive narrative against a larger company can.help a small establishment—and spur consumers to.make a purchase that supports the smaller.competitor..In subsequent studies, we tested this “framing-.the-game” effect in various contexts and product.categories and further found that support for a large.brand decreases when consumers view it as being in.competition with a smaller brand. In one study, we.asked participants to assess two hypothetical rival tire.shops, “Tire World” and “Tire Planet,” under three.conditions—small vs. large, small vs. small or large.vs. large competitors. While participants indicated no.preference for the small or large shop when it was.competing against a competitor of similar size, the.small vs. large competitive context elicited a strong.preference for the small rather than large shop.Q: Which choice best describes the overall structure of the passage? Answer Choices: (A)A popular belief about a particular industry is explained, experiments supporting that belief are described, and the implications of the experiments are identified. (B)An unexpected claim about consumer behavior is introduced, examples supporting the claim are detailed, and experiments confirming the claim are discussed. (C)A debate about an economic theory is outlined, two opposing views on the debate are explained in more detail, and research supporting one of those views is recounted. (D)A negative impact of a common business practice is presented, two stories are used as an illustration, and research suggesting improvements is summarized.
A: Among A through D, the answer is
(A)A popular belief about a particular industry is explained, experiments supporting that belief are described, and the implications of the experiments are identified.
(B)An unexpected claim about consumer behavior is introduced, examples supporting the claim are detailed, and experiments confirming the claim are discussed.
(C)A debate about an economic theory is outlined, two opposing views on the debate are explained in more detail, and research supporting one of those views is recounted.
(D)A negative impact of a common business practice is presented, two stories are used as an illustration, and research suggesting improvements is summarized.
Answer: 1