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12 Oct 2013, 10:18
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.
The argument claims that since the promotional price reductions on its energy drinks were received well by consumers and increased the unit sales, similar price reductions should be offered on all drinks to increase profitability and enhance its perception in the eyes of consumers. Stated in this way, the argument fails mention several key factor, on the basis of which it could be evaluated. However, the argument relies on several assumptions, for which there is no clear evidence stated. Therefore the argument is weak, unconvincing and has several flaws.
Firstly, the author readily assumes that the promotional price reductions saw a dramatic increase in unit sales without presenting relevant evidence for the same. It could be argued that the increase in sales might have been a temporary phenomenon and sales reduced next month. The author also fails to look into various other factors like lack of other energy drinks in that price range for the dramatic increase in sales.The author wrongly assumes price only as a factor for sales increase without looking into other factors like quality of the drink. The author would have strengthened his argument considerably if he provided facts to prove the same.
Secondly, the author readily reaches on the conclusion that the drinks were successful based on a survey of customers without providing further information on the same. To illustrate, the consumers who were surveyed might have been consumers of their previous drinks and thus show more inclination to known brands. If the author provided additional information on the consumer base surveyed it would further strengthen the argument.
Lastly, the author reveals that since the promotional price increase was well received by consumers and increased the drink's unit sales, the similar approach should be applied for other drinks produced by the firm. This reveals a leap of faith and poor reasoning on reaching the conclusion. In fact, it is not at all clear if the increased sales with lower prices would lead increased profitability without noting other factors like the production cost, maintenance cost, the current price of its other drinks, popularity of those drinks etc. Without convincing answers to these question, one is left with the impression that the claim is more of a wishful thinking than substantive evidence.
In conclusion, the argument is flawed for the above mentioned reasons and therefore unconvincing. It would be considerably strengthened if the author clearly mentions the various factors in reaching the conclusion like survey base, production cost, price of other energy drinks etc. Without these information, the argument is weak and left open for debate.