Find all School-related info fast with the new School-Specific MBA Forum

It is currently 21 Aug 2014, 18:22

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

One name brand cereal manufacturer...

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:
Intern
Intern
avatar
Joined: 02 Oct 2010
Posts: 19
Followers: 0

Kudos [?]: 6 [0], given: 3

One name brand cereal manufacturer... [#permalink] New post 29 Dec 2012, 13:20
1
This post was
BOOKMARKED
00:00
A
B
C
D
E

Difficulty:

  25% (medium)

Question Stats:

73% (02:17) correct 27% (00:52) wrong based on 52 sessions
One name brand cereal manufacturer...

OA is NOT B. Can someone help me understand what the words "pass on" mean in the sentence "supermarkets will pass on savings...."

Thanks
[Reveal] Spoiler: OA

Attachments

GMAT QPack CR.JPG
GMAT QPack CR.JPG [ 69.12 KiB | Viewed 1855 times ]

1 KUDOS received
Senior Manager
Senior Manager
User avatar
Joined: 27 Jun 2012
Posts: 417
Concentration: Strategy, Finance
Followers: 38

Kudos [?]: 344 [1] , given: 182

Re: Question from GMAT Question Pack [#permalink] New post 29 Dec 2012, 15:13
1
This post received
KUDOS
In this plan, manufacturer is planning to sell the product store at reduced wholesale price expecting that it will "Pass on" this reduced price to end customer.

For example:
Current situation:
Wholesale price to store: $8, Manufacturer Product: MRP- $12
Store Product: MRP- $10
In this case consumer is switching to Store brand as its cheaper (by $2)

Proposed situation:
Wholesale price to store: $6 (note 20% reduction), Manufacturer Product: MRP- $12, Expected Discounted consumer price: $10
Store Product: MRP- $10

Explanation:
In this case the manufacturer assumes that the store will sell manufacturer's product at discounted price down to $10 from $12 (i.e. will "pass on these savings" to consumer) With both the products priced same, it will eliminate the price incentive for consumers who are switching produces based on the price. However as the manufacturer is not reducing the price on MRP but wholesale prices, Store will not give discount to the customer and will still continue sell at MRP $12, making sure they continue to sell their store cereal product at cheaper price.

D is the correct answer.
_________________

Thanks,
PraPon

Tough 700+ Level RCs: Passage1 | Passage2 | Passage3 | Passage4 | Passage5 | Passage6 | Passage7
Reading Comprehension notes: Click here
VOTE: vote-best-gmat-practice-tests-excluding-gmatprep-144859.html
PowerScore CR Bible - Official Guide 13 Questions Set Mapped: Click here


Last edited by PrashantPonde on 01 Jan 2013, 09:45, edited 1 time in total.
Intern
Intern
avatar
Joined: 02 Oct 2010
Posts: 19
Followers: 0

Kudos [?]: 6 [0], given: 3

Re: Question from GMAT Question Pack [#permalink] New post 29 Dec 2012, 17:04
Thanks Prapon for providing some insight. But in the proposed solution which you mentioned, why did you again add 20% more discount? You have applied 20% (acc to current situation) + another 20% which is equivalent to 40%. Can you clarify?
Senior Manager
Senior Manager
User avatar
Joined: 27 Jun 2012
Posts: 417
Concentration: Strategy, Finance
Followers: 38

Kudos [?]: 344 [0], given: 182

Re: Question from GMAT Question Pack [#permalink] New post 29 Dec 2012, 22:37
I guess I applied 20% applied only on wholesale price. In short - The manufacturer plans to reduce the wholesale price of the product from $8 to $6 (by 20%) and assumes that store will "pass on" that discount/savings to consumer by selling the product at $10 (discounted price) instead of $12 (MRP).
_________________

Thanks,
PraPon

Tough 700+ Level RCs: Passage1 | Passage2 | Passage3 | Passage4 | Passage5 | Passage6 | Passage7
Reading Comprehension notes: Click here
VOTE: vote-best-gmat-practice-tests-excluding-gmatprep-144859.html
PowerScore CR Bible - Official Guide 13 Questions Set Mapped: Click here

Expert Post
Moderator
Moderator
User avatar
Joined: 01 Sep 2010
Posts: 2367
Followers: 266

Kudos [?]: 2245 [0], given: 690

Re: Question from GMAT Question Pack [#permalink] New post 30 Dec 2012, 08:28
Expert's post
Intern
Intern
avatar
Joined: 02 Oct 2010
Posts: 19
Followers: 0

Kudos [?]: 6 [0], given: 3

Re: Question from GMAT Question Pack [#permalink] New post 31 Dec 2012, 14:37
Its a MEDIUM level difficulty question
Expert Post
Moderator
Moderator
User avatar
Joined: 01 Sep 2010
Posts: 2367
Followers: 266

Kudos [?]: 2245 [0], given: 690

Re: Question from GMAT Question Pack [#permalink] New post 01 Jan 2013, 03:54
Expert's post
Senior Manager
Senior Manager
User avatar
Joined: 27 Jun 2012
Posts: 417
Concentration: Strategy, Finance
Followers: 38

Kudos [?]: 344 [0], given: 182

Re: Question from GMAT Question Pack [#permalink] New post 01 Jan 2013, 09:46
Yes D is the correct answer Carcass.
_________________

Thanks,
PraPon

Tough 700+ Level RCs: Passage1 | Passage2 | Passage3 | Passage4 | Passage5 | Passage6 | Passage7
Reading Comprehension notes: Click here
VOTE: vote-best-gmat-practice-tests-excluding-gmatprep-144859.html
PowerScore CR Bible - Official Guide 13 Questions Set Mapped: Click here

Senior Manager
Senior Manager
User avatar
Status: Prevent and prepare. Not repent and repair!!
Joined: 13 Feb 2010
Posts: 278
Location: India
Concentration: Technology, General Management
GPA: 3.75
WE: Sales (Telecommunications)
Followers: 9

Kudos [?]: 18 [0], given: 282

Re: One name brand cereal manufacturer... [#permalink] New post 20 May 2013, 10:32
The official explanation is more convincing. It says- the store would want to continue with the store brand because it is more profitable rather than the new brand whose profit is less.
_________________

I've failed over and over and over again in my life and that is why I succeed--Michael Jordan
Kudos drives a person to better himself every single time. So Pls give it generously
Wont give up till i hit a 700+

Director
Director
avatar
Joined: 03 Aug 2012
Posts: 887
Concentration: General Management, General Management
Schools: ISB '16
GMAT 1: 630 Q47 V29
GMAT 2: 680 Q50 V32
GPA: 3.7
Followers: 12

Kudos [?]: 183 [0], given: 304

Premium Member CAT Tests
Re: One name brand cereal manufacturer... [#permalink] New post 19 Jun 2014, 21:59
A simple query:

When supermarkets are focused on selling their store cereals, then why at the first place they are buying name-brand cereal from the manufacturer?
_________________

Rgds,
TGC!
_____________________________________________________________________
I Assisted You => KUDOS Please
_____________________________________________________________________________

Re: One name brand cereal manufacturer...   [#permalink] 19 Jun 2014, 21:59
    Similar topics Author Replies Last post
Similar
Topics:
1 The Brand Name... How Much Weight? warrak2000 7 14 Dec 2010, 10:35
1 MBA Brand Name Value bnessman 2 28 Jun 2010, 09:30
2 Experts publish their posts in the topic Brand Name of Employer? wcgc 10 10 Feb 2009, 12:26
Advertisement: Clark brand-name parts are made for cars GMATBLACKBELT 18 21 Nov 2007, 23:33
School Name Brand Recognition Misconception johnnyx9 25 09 Feb 2007, 08:02
Display posts from previous: Sort by

One name brand cereal manufacturer...

  Question banks Downloads My Bookmarks Reviews Important topics  


GMAT Club MBA Forum Home| About| Privacy Policy| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group and phpBB SEO

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.