There is relatively little room for growth in the overall carpet marke

OFFICIAL EXPLANATION

As always, the key to success is to isolate the conclusion, which appears in the last sentence: “companies producing carpet will be able to gain market share in the carpet market only through purchasing competitors.” As you should have noted while reading, the conclusion contains a conditional indicator and is thereby conditional in nature. The conclusion can be diagrammed as: GMS = gain market share in the carpet market, PC = purchasing competitors. GMS
PC. According to the author, to gain market share in the carpet market a company must purchase a competitor. Answer choice (C) is often selected by students, but it does not attack this idea. To attack a conditional statement you must show that the necessary condition is not actually necessary for the sufficient condition to occur. Answer choice (C) simply suggests that when companies purchase their competitors the endeavor is often financially unsuccessful. Essentially, answer choice (C) fails to prove that purchasing competitors is unnecessary to gain market share. Answer choice (D), on the other hand, does suggest a way for companies to gain market share without purchasing competitors, thereby attacking the conditional statement given in the stimulus. Thus, answer choice (D) is correct.

Answer choice (A): This answer goes beyond the scope of the argument, which is limited to the carpet market (and not other floor coverings).

Answer choice (B): This is an Opposite answer that strengthens the argument. If there are no remaining niches to fill, then there is no way to expand other than to purchase a competitor.

Answer choice (C): This attractive answer is wrong for two very strong reasons: 1. A Shell Game is played with the details of the conclusion. The conclusion is about market share. Answer choice (C) is about a decline in profits and revenues. The two are not the same, and so the information in the answer choice does not weaken the conclusion. 2. Even if you assume that market share is the same thing as profits and revenues, a second Shell Game is played because the answer then attacks a conclusion that is similar but different than the given conclusion. If the conclusion were as follows: PC
GMS, then answer choice (C) would be correct (again, assuming market share is the same thing as profits and revenues). But, the above is a Mistaken Reversal of the conclusion, and so the attack is made on a statement that uses the same terms as the conclusion but puts them in a different relationship. This is a great example of the cleverness displayed by the test makers. Fortunately you can avoid this answer if you know what to look for when attacking conditional reasoning. One point worth noting is that it is no accident that the most tempting wrong answer choice appears just before the correct answer.

Answer choice (D): This is the correct answer. If price reductions drive out some of the carpet producers, then other producers can take the market share left behind. This scenario shows that a company can gain market share without purchasing a competitor, thus attacking the necessary condition in the conclusion.

Answer choice (E): This Opposite answer strengthens the argument. If the consumers are resistant to new styles, then one fewer possibility exists if a company is trying to increase market share. By eliminating this option, the conclusion is strengthened (by eliminating an idea that would hurt the argument, one can strengthen the argument because it has fewer “competitors.”).
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IMO D.

D provides an alternate way for companies to gain market share and hence casts doubt on the argument's conclusion.

HI Souvik,

IMO, C or A.

The conclusion is ... Carpets producting companies can only get a market share when they merge. Agressive marketing does ont yield profits.

To break the conclusion, the aim will be either to say, ' Simple marketing can reap lots of profits' Or 'Mergers will not be useful'

My thought process.

B: Out of scope

D: Does not break the conclusion.

E: Customer choice is out of scope.


A: 2 of the 3 mergers have failed: Mergers have failed. We cannot standardise somethng that happend for 3 companies to the whole industry.

C: Most established carpet producers sell various brands but there is no niche; Hence there will not be any use in merging with other companies.


Please let me know whether this is correct.

Hi shriramvelamuri,
A states something that happened 10 years back. Does this warrant the fact that it might recur?? I dont think so, hence, A is ruled out.
As for C, most established carpet producers market under several brands. This does not affect the conclusion. To weaken the conclusion we need to say that "Carpet producing companies can gain a market share NOT through merging, BUT through aggressive marketing."
Option D does exactly that; When other producers are forced to leave the market, there's no room for a merger and dominant firms are reducing prices substantially, which is aggressive marketing. Hence, D. Hope that was helpful.

There is relatively little room for growth in the overall carpet market, which is tied to the size of the population. Most who purchase carpet do so only once or twice, first in their twenties or thirties, and then perhaps again in their fifties or sixties. Thus as the population ages, companies producing carpet will be able to gain market share in the carpet market only through purchasing competitors, and not through more aggressive marketing.

Which one of the following, if true, casts the most doubt on the conclusion above?

A. Two of the three mergers in the industry’s last ten years led to a decline in profits and revenues for the newly merged companies. -we are not worried about the profits

B. Most of the major carpet producers market other floor coverings as well. -the argument is only about carpet market

C. Most established carpet producers market several different brand names and varieties, and there is no remaining niche in the market for new brands to fill. -this doesn't explain the market share of the market players.

D. Price reductions, achieved by cost-cutting in production, by some of the dominant firms in the carpet market are causing other producers to leave the market altogether. -Correct. So there is another reason (cost cutting) that might help in improving the market share of a company.

E. The carpet market is unlike most markets in that consumers are becoming increasingly resistant to new patterns and styles. -out of scope

Can someone distill C into simpler terms? I see why D is correct now, but the way I rationalized C is as follows:

Basically aggressive advertising is useful because it protects against losses in market share (e.g. crowding others out phenomenon). So advertising does have a role to play...
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Hello,
Can any expert explain the bold part in explanation of option C (which is actually referring to option A in the question)? and also why the correct option D is chosen over this option?
VeritasKarishma GMATNinja MartyTargetTestPrep egmat

I am not sure what the official explanation is trying to say. Here is my take on the options.


- People buy carpets only a couple of times in their lives.
- So there is little room for growth in carpet markets.
Conclusion: As population ages (fewer babies), to increase market share, companies will need to buy out competitors. Marketing will not help to increase market share.

So the conclusion says that since carpet market is not growing, the only way a company can have higher market share is by reducing the number of players in the market by buying out other companies. They cannot hope to attract new customers or customers away from other companies by marketing.

We need to weaken this conclusion.

A. Two of the three mergers in the industry’s last ten years led to a decline in profits and revenues for the newly merged companies.

Irrelevant. We are concerned only about market share (out of the total sales in the industry, what % belongs to a particular company)

B. Most of the major carpet producers market other floor coverings as well.

Irrelevant. Only carpets are within our scope.

C. Most established carpet producers market several different brand names and varieties, and there is no remaining niche in the market for new brands to fill.

This tells us that the market is maxed out. No new players can be successful since there is no space for them. So marketing will not be helpful. If one buys out another player, then yes, they will own all their brands and hence, increase their market share. This certainly does not weaken our conclusion. It seems to agree with our conclusion.

D. Price reductions, achieved by cost-cutting in production, by some of the dominant firms in the carpet market are causing other producers to leave the market altogether.

Some players are leaving the market since they cannot give competitive pricing. So the number of players in the market are expected to reduce. Then marketing campaigns might be successful in getting higher market shares since there are going to be fewer players. Also it seems that marketing campaigns of price reductions are leading to higher market shares by driving out competitors. Then it may not be necessary to buy out other companies to increase market share. It weakens our conclusion.

E. The carpet market is unlike most markets in that consumers are becoming increasingly resistant to new patterns and styles.

This supports that marketing campaigns may not have much impact. It doesn't weaken our conclusion.

Answer (D)
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In the official answer, i think the answers may be switched around.

In the official explanation, C is referring to A, and A is referring to C.

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There is relatively little room for growth in the overall carpet market, which is tied to the size of the population. Most who purchase carpet do so only once or twice, first in their twenties or thirties, and then perhaps again in their fifties or sixties. Thus as the population ages, companies producing carpet will be able to gain market share in the carpet market only through purchasing competitors, and not through more aggressive marketing.

Which one of the following, if true, casts the most doubt on the conclusion above?

A. Two of the three mergers in the industry’s last ten years led to a decline in profits and revenues for the newly merged companies. - WRONG. Past is irrelevant. Additionally, nothing about market share.

B. Most of the major carpet producers market other floor coverings as well. - WRONG. Scope shift. Irrelevant.

C. Most established carpet producers market several different brand names and varieties, and there is no remaining niche in the market for new brands to fill. - WRONG. Having no niche is a disaster for new carpet makers. With already blue market turning red, acquiring seems to be the only way to increase the share.

D. Price reductions, achieved by cost-cutting in production, by some of the dominant firms in the carpet market are causing other producers to leave the market altogether. - CORRECT. If producers are leaving then that share of market are easy to be captured by those not leaving. This leaves us with another way of increasing the market share instead of just acquiring a competitors.

E. The carpet market is unlike most markets in that consumers are becoming increasingly resistant to new patterns and styles. - WRONG. New Patterns, whether by old established players or new ones, aren't liked by consumers so increasing market shares is possible by acquiring competitors. As new players may like to bring new patterns wherein old ones may stick to old patterns since they know it well, acquiring seems to be a good idea to increase share.

Answer D.
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