Abstract
Demand in some markets displays a strong taste for variety. This means that the markets consist of small niches, each with a strong preference for a distinct version of the basic product. Examples include markets with strong local character (local video stores, dry cleaning, etc.), products appealing to specialized tastes (microbrewed beer, specialty restaurants, etc.), and markets for entertainment content. Car retailing falls into this category because demand is fundamentally local in nature. A key strategy in such an industry is consolidation. Studies attempts at consolidating automobile retailing, emphasizing their pitfalls, and showing that they were based on overly optimistic assessments of the potential economies of scale and creation of customer value.To introduce the concept of demand with strong taste for variety, as well as economies of scale and consolidation strategies.
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