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The following appeared in an Excelsior Company memorandum.
"The Excelsior Company plans to introduce its own brand of coffee. Since coffee is an expensive food item, and since there are already many established brands of coffee, the best way to gain customers for the Excelsior brand is to do what Superior, the leading coffee company, did when it introduced the newest brand in its line of coffees: conduct a temporary sales promotion that offers free samples, price reductions, and discount coupons for the new brand."
Discuss how well reasoned you find this argument. In your discussion be sure to analyze the line of reasoning and the use of evidence in the argument. For example, you may need to consider what questionable assumptions underlie the thinking and what alternative explanations or counterexamples might weaken the conclusion. You can also discuss what sort of evidence would strengthen or refute the argument, what changes in the argument would make it more logically sound, and what, if anything, would help you better evaluate its conclusion.
The memorandum states the the Excelsior Company will use a temporary sales promotion to introduce its brand of coffee to an already saturated coffee market. The logic behind this decision is the success of a similar strategy adopted by Superior, a leading competitorin the segment, when it introduced it newest brand of coffee. This argument is flawed because it does not take into consideration the differences between Excelsior and Superior, both in terms of the companies' varying brands and products. These differences, that I will expound on in this essay, are consequential to the sucess or failure of the strategy about to be adopted. First, the memo indicates that Superior is an already established "leading" company in the coffee space. Unlike Superior, Excelsior is just breaking into the already saturated market. Superior may have a more recognizable brand and followership that would enable it to experiment with new products with less risk than Excelsior would. Second, the memo states that coffee is an expensive item. I assume that this observation is relative to other food and beverage products. Relatively expensive items usually play by different rules of demand. The presitge and assumed quality of the product's brand carry greater weights in the purchase decision than they would in while buying cheaper or less expnesive products. Customers might be unwilling to sacrifice familiarity with the already established brands that they consume in order to try a new product. Besides, the customer base of consumers of expensive coffee ihardly intersects with the universe of consumers who subscribe to free offerings of product samples, reduced price promotions and discount coupons. Third, and perhaps most importantly, the coffee consumption segment is relatively crowded with "many established brands", according to the memo. Ceteris paribus, the number of players in a space is directly correlated with the competition in that space. Excelsior needs to differentiate its brand and its product on some other factor other than price in order to compete effectively and survive in the market. The reason why price decreases, such as those offered by temporary sales promotions, are not a good differentiator is because they could lead to price wars which will eventually suppress profits in the long run. The memo compares apples to oranges. The success of the strategy adopted by a well established company when introducing its latest product is no indication that the replication of such a strategy will be successful for a newer company. Excelsior should perform further market research to understand the drivers of consumer's coffee purchasing decisions in order to introduce a truly different product that would be capable of selling itself to consumers without the help of free samples, price reductions and discount coupons
Total Score 5 Analyzes the issue 5 Supports ideas 5 Organizes a coherent idea 6 Language control 5