Reference no: EM132218922

Baby Needs a New Crib "Fancy Care," an on-line retailer that sells home and children’s items, such as children’s furniture, clothing, and toys, is seeking a way to reach a new audience and stop the declining sales and revenue trends it is suffering. A market research firm hired by Fancy Care has identified a new but potentially risky market: single parents. The new market seems attractive because of the large number of single parents, but many of these households are severely constrained in terms of their monetary resources. The research firm proposes that Fancy Care offer a generous credit policy that would allow consumers to purchase up to $500 worth of merchandise on credit without a credit check, provided they sign up for direct payment of their credit account from a checking account. Because these are high-risk consumers, the credit accounts would carry high interest rates. The research firm says their calculations show that even with some losses, enough accounts would be paid off to make the venture extremely profitable for Fancy Care. Should Fancy Care pursue this new marketing strategy? Why or why not? Include reference.