A coffee manufacturer wants more restaurant chains to serve its brands

Magoosh Official Explanation

A coffee manufacturer wants to expand its volume, so it is going to lower its price, at least temporarily, with the hope that the lower price will induce more restaurant chains to choose it. In order to judge whether this plan will succeed, we need to know what?

(A) is the credited answer. If this coffee manufacturer's discounted price is lower than that of the coffee brand currently served in nationwide chains, then this manufacturer's coffee will look cheap by comparison. But, if this coffee manufacturer's discounted price is about the same or higher than that of the coffee brand currently served in nationwide chains, then it's not clear that any nationwide chain would have any reason to switch the brand of coffee it carries. This issue is absolutely crucial for the success of the coffee manufacturer's plan.

(B) is not relevant. If this coffee manufacturer acquires new customers nationwide, then of course, it will have to ship its coffee to them. Presumably, the coffee manufacturer will evaluate shipping options and choose one of the more inexpensive options for shipping. Whether they stay with their current shippers or not has little if any bearing on the success of this plan.

(C) is not a crucial issue. What's crucial is that this manufacturer's coffee is cheaper than the competitor's coffee. How much each kind of coffee is discounted doesn't matter, as long as they are all lower than the similar coffees of competitors.

(D) is not clearly related. Part of this plan involves spreading their business and gaining new customers, so presumably, that would entail more advertising. It's true that their profits will temporarily decline when the coffee's price is discounted, but it's not at all clear that cutting advertising would be at all an advisable cost-cutting strategy.

(E) is completely irrelevant. This question is asking us: what would we need to evaluate the chances of success of this plan. If there's another plan, that's an entirely separate issue. It's beyond the scope of this particular question

(A) Whether their discounted price is lower than the prices of the coffee manufacturers who currently provide coffee to these nationwide restaurant chains.
Correct.
(B) Whether the manufacturer will use the same shipping system as it has been using to ship coffee to restaurants across the country.
out of scope.
(C) Whether the prices of some mixes of coffee will be discounted more than the prices of others.
out of scope.
(D) Whether the coffee manufacturer will be able to cut costs associated with advertising to maintain a strong profit margin even with the lower prices.
tricky, but nothing about the costs.
(E) Whether an alternate plan would allow the coffee manufacturer to take greater profits from the restaurant chains to which it currently provides coffee.
Not important.

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