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Joined: 24 Apr 2012
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Concentration: Strategy
WE:Project Management (Consulting)
Our promotional price reductions on energy drinks have been highly suc
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19 Jul 2014, 09:45
ESSAY QUESTION:
The following appeared in a corporate memorandum of a beverage manufacturer:
“Our promotional price reductions on energy drinks have been highly successful, as we have seen a dramatic increase in unit sales. Further, surveys of our consumers indicate that this promotion was favorably received by the majority of our customers. Therefore, to improve our company’s profitability and enhance its perception in the eyes of consumers, similar price reductions should be offered on all drinks produced by our firm.”
Discuss how well reasoned you find this argument. Point out flaws in the argument's logic and analyze the argument's underlying assumptions. In addition, evaluate how supporting evidence is used and what evidence might counter the argument's conclusion. You may also discuss what additional evidence could be used to strengthen the argument or what changes would make the argument more logically sound.
MY RESPONSE:
The argument co-relates the increase in sales of energy drink attributing it to the reduction in price done during the promotional campaign. The argument then baseline the strategy to be used further for all its products. This makes the argument incomplete and uses an assumption of using a similar line of action for marketing different products. The argument will need more precise and detailed information for further analysis which is discussed further.
First, the argument states that the the campaign was highly successful leading to increase in unit sales and was very well received by the customers. Now , the argument should provide more evidence to make this inference aligned as there are multiple factors like demographics, environment, sample of population involved in a promotional campaign. For example: Promotion of energy drink would have worked well and found many takers during a rock show or in a sports event. Wile this would have had a different picture when done during a family gathering or a child show due to growing knowledge and speculation of the content of different beverages.
Second, the argument infers to use the same strategy in different products to increase profitability and increase customer base. This is highly questionable as what might work for a single product might not work well for a different product. To be more defined, the promotional strategy that worked in favor for an energy drink might not work for a fruit juice based beverage produced by the same company. Fruit juice has a very distinct market share and the production variables that includes cost involved in it are completely different from an energy drink.
To conclude, the argument should explicitly use more detailed information to support the assumption and inference he draws based upon a single experience. The market for a beverage is very dynamic and dependent upon multiple factors and parameters, which should be elaborated to a certain extent to make it more valid and sound.