betterscore wrote:
A certain automaker aims to increase its market share by deeply discounting its vehicles prices for the next several months. The discounts will cut into profits, but because they will be heavily advertised the manufacturer hopes that they will attract buyers away from rival manufacturers' cars. In the longer term, the automaker envisions that customers initially attracted by the discounts may become loyal customers.
In assessing the plan's chances of achieving its aim, it would be most useful to know which of the following?
A. Whether the automaker's competitors are likely to respond by offering deep discounts on their own products
B. Whether the advertisements will be created by the manufacturer's current advertising agency
C. Whether some of the automaker's models will be more deeply discounted than others
D. Whether the automaker will be able to cut costs sufficiently to maintain profit margins even when the discounts are in effect
E. Whether an alternative strategy might enable the automaker to enhance its profitability while holding a constant or diminishing share of the market
OG2017 CR558 P514
Discounted Vehicles
Step 1: Identify the QuestionThis question asks which answer would be
most useful to know in assessing the plan, so this is an
Evaluate the Argument question.
Step 2: Deconstruct the ArgumentDiscounts → increase MS
But drop in profit
© create loyal cust
Note: MS is an abbreviation for market share.
Step 3: Pause and State the GoalThis argument presents a plan, and all steps of the plan must work for the plan to achieve its aim. Do any specific aspects of the plan seem questionable or unlikely to work? On Evaluate questions, the answer should be something that is important to know to decide if the plan will in fact work as stated in the argument.
Step 4: Work from Wrong to Right(A) CORRECT. If competitors cut prices in response, the automaker is unlikely to gain much market share from its price cuts, weakening the argument. If competitors would not respond in this way, at least the first step of the plan is more likely to work (price cuts lead to gains in market share), strengthening the argument.
(B) In order for the plan to work the advertising campaign must attract buyers, but the advertising agency that creates these ads is not relevant.
(C) In order for the plan to work, the discounts must attract customers. The relationship between the levels of discounts on different models of cars, however, does not address whether the discounts will be effective.
(D) The argument acknowledges that the plan will initially cut into profits; the plan focuses on increasing long-term profits. Whether the company is able to maintain short-term profits through cost cuts is thus not important to the success of the stated plan.
(E) This question asks about the specific plan in the argument achieving its aim. Other plans to improve profitability are not relevant.
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