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 asserts that because the unit sales increased after a promotional price offer, the company should take similar step with a view to increasing it's profitability and enhancement in the eyes of it's customers. The argument is flawed for several reasons: The article needs to properly and crtically address issues that could reinforce the conclusion. The issues include, but not limited to: the correct variables to consider in arriving at true profitaility; the right class of people to address among others issues.
First, the article asumes that a mere increase in sales volume is a guarantee for a boom in profitability. This is not so. Profitability is a factor of two variables: income and expenses. If the arguemnt had shed light on how much was expended in the promotional price offer, we would have been able to better arrive at whether the price offer was in any case necessary or not. By keeping mum on the extent of expenses made, we cannot conveniently assume that the offer was indeed a good stragety for increase in profitability.
Second, the argument assumes that every person sample for an opinion will give the same response. This is not true. Consider a set of employees paid to give a planned response to a questionaire to another set of strange people who, perhaps had never got a taste nor known the drink before now. The result can easily be guessed. The class of employees will most likely give an opinion that falls within the expectations of the company inquiries whereas the strange people will likely differ in opinion for many reasons: maybe because they have never had of the name before; because they are not used to the taste; or even because they detest the apperance of the packaging. These reasons, among others, could be advanced for rejecting the product.
Finally, by concluding that because unit sales of this drink increased -for reaons not disclosed- the article position is premised on grounds not convincing. Various questions remain unanswered: Are the
products of the same packaging; the same taste, within the same location, or are they made from the same raw materials? All these were not addressed by the article. There is a possibility that the customers surveyed like the packaging of this product whereas other drinks have variant packaging that may not appeal to the customers. It is also possible that the drink in question is marketed within locations that people who patronize it most leave. Thus, applying the same strategy to other product may not work after all.
In sum, the argument is not sound for the reasons discussed above. To fuether reinforce it's possition, the article needs to consider various aspects, including the fact that an increase in unit sales does not necessarily equate to an increase in profitability; the sampled class needs be properly assessed to ensure that they are not simply people paid to answer in favor of the company product; also important is the need to analyse the qualities of the drink in question as it differs from other products from the company. Unless the issues above are carefully analyzed, the strength and convinction of the conclusion remians questionable and open to further criticism.
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