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Over the past five years, the price gap between name-brand

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Over the past five years, the price gap between name-brand [#permalink] New post 30 Jun 2009, 22:59
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A
B
C
D
E

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9. Over the past five years, the price gap between name-brand cereals and less expensive store-brand cereals has become so wide that consumers have been switching increasingly to store brands despite the name brands’ reputation for better quality. To attract these consumers back, several manufacturers of name-brand cereals plan to narrow the price gap between their cereals and store brands to less than what it was five years ago.

Which of the following, if true, most seriously calls into question the likelihood that the manufacturers’ plan will succeed in attracting back a large percentage of consumers who have switched to store brands?

A. There is no significant difference among manufacturers of name-brand cereals in the prices they charge for their products.
B. Consumers who have switched to store-brand cereals have generally been satisfied with the quality of those cereals.
C. Many consumers would never think of switching to store-brand cereals because they believe the name brand cereals to be of better quality.
D. Because of lower advertising costs, stores are able to offer their own brands of cereals at significantly lower prices than those charged for name-brand cereals.
E. Total annual sales of cereals—including both name-brand and store-brand cereals—have not increased significantly over the past five years.


I dont know the answer, Kindly explain along with the right answer
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Re: Over the past five years [#permalink] New post 15 Jul 2009, 04:50
B looks like the ans.

Because if people are satisfied with the store-brand cereals then there is no reason for them to shift to other brands.Thus any efforts on the part of name-brand cereals manufacturers will go waste.
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Re: Over the past five years [#permalink] New post 15 Jul 2009, 22:52
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yup B.
notice the phrases "to narrow the price gap" and "switching increasingly to store brands despite the name brands’ reputation for better quality".

This implies:
=> price difference will still be there and name brands' cereals will be 'slightly' costlier
=> the only and the most significant difference between the two types is quality.

Hence:
=>the only important factor to think about switching will be quality.

So, if customers are already satisfied with quality then there is no value-addition in switching to name brands.
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Re: Over the past five years [#permalink] New post 16 Jul 2009, 01:23
Good explanation, Economist.
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Re: Over the past five years [#permalink] New post 13 May 2010, 12:30
Yeah. Only B makes sense. D is a boobie trap but it has no substance. It doesn't reduce the likelihood of people switching back but if they're satisfied and it's cheaper then why change back?
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Re: Over the past five years [#permalink] New post 15 May 2010, 04:29
B must be the ans
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Re: Over the past five years, the price gap between name-brand [#permalink] New post 12 Nov 2013, 03:56
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Re: Over the past five years, the price gap between name-brand [#permalink] New post 06 Sep 2014, 00:02
9. Over the past five years, the price gap between name-brand cereals and less expensive store-brand cereals has become so wide that consumers have been switching increasingly to store brands despite the name brands’ reputation for better quality. To attract these consumers back, several manufacturers of name-brand cereals plan to narrow the price gap between their cereals and store brands to less than what it was five years ago.

Which of the following, if true, most seriously calls into question the likelihood that the manufacturers’ plan will succeed in attracting back a large percentage of consumers who have switched to store brands?

A. There is no significant difference among manufacturers of name-brand cereals in the prices they charge for their products. - OFS as we are not bothered about the prices charged among the name brand cereals.

B. Consumers who have switched to store-brand cereals have generally been satisfied with the quality of those cereals - The customers are already satisfied with the quality of the cereals and they will not come back even if the difference of the price is narrowed - Correct

C. Many consumers would never think of switching to store-brand cereals because they believe the name brand cereals to be of better quality - This is OFS as we are talking about other set of customers

D. Because of lower advertising costs, stores are able to offer their own brands of cereals at significantly lower prices than those charged for name-brand cereals - OFS

E. Total annual sales of cereals—including both name-brand and store-brand cereals—have not increased significantly over the past five years - OFS we are not bothered about the sales
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Re: Over the past five years, the price gap between name-brand   [#permalink] 06 Sep 2014, 00:02
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