Here is a new passage - fresh from the oven. Try it out that strategies that we described in our article on Main point and Paragraph summaries.


Pricing is the most influential medium of communication that companies can use with their customers. Prices send unequivocal messages about what the firm believes in, what it thinks of its customers, and how it wants to interact with them.

The traditional approach for fixing the price by ‘running the numbers’ only aims at maximizing short term profits. Using this mechanical and antagonistic approach solely may not be a sustainable long-term strategy since present day consumers disseminate information about a firm’s prices, exploiting social media platforms to publicize policies that they believe are unfair. And they don’t hesitate to abandon companies that cross the line. For example, when Bank of America announced in September 2011 that it would start charging a $5 monthly debit card fee, the public outcry was so intense that the bank soon rescinded the plan. But the damage was done and account closings increased significantly.

Pricing instead should be strategically used to create shared value for both the company as well as the customers. The key step towards such pricing would be to humanize the process by focusing on consumer relations and not solely on the transactions. Attempts should be made to innovatively design pricing models to facilitate a better consumer experience. Recognizing that many of its customers disliked shipping costs and long waits for delivery, Amazon introduced a service, which, for an annual fee, provides two-day shipping on all orders, thereby eliminating the pain of paying associated with each order. This pricing scheme not only rewards high-volume customers but, more strategically, it also helped Amazon change buying behavior by encouraging customers to do more of their shopping with the company.
Promoting transparency and avoiding complicated pricing plans and obscure contractual terms is another vital practice. A firm that is transparent about the way it makes money fosters engagement and builds trust and goodwill among customers. Hidden costs and consumer traps may help for generating short term revenues but are disadvantageous on a long-term basis. Lastly, companies must closely understand and be able to influence the perceived standards of fairness of the price of their product or service.

 
The passage is primarily concerned with:
1. Analyzing the various advantages and disadvantages of various pricing strategies.
2. Describing the various aspects of pricing process
3. Explaining the importance of humanizing the process of price fixing
4. Identifying steps to adapt pricing strategy to changing trends.
5. Discussing about the changing trends in consumer behavior with regards to unfair pricing


By using the phrase ‘running the numbers’ the author is referring to what practice?
1. Running complex equations on a computer to generate a number to fix the price.
2. Making calculations for optimizing profits.
3. Making decisions solely based on calculations ignoring unquantifiable variables that may have a greater impact.
4. Using traditional methods for calculation and price fixing.
5. Running simulations on statistical data to fix price.

The author of the passage is LEAST likely to make which of the following recommendations to Businessmen.
1. Instead of using pricing for profits, businessmen should use pricing to increase consumer satisfaction.
2. They should avoid hidden costs and simplify the terms of use of their service for better understanding.
3. Businessmen should look at value creation for the consumer too along with traditional strategies for price fixing.
4. They should use pricing as an effective means for communicating with customers.
5. They should try to position themselves so that they may be able to influence the perceived level of fairness of the price of their product.

According to the passage, which of the following describes present day consumer most accurately?
1. Consumers sometimes use modern tools to criticize products and service.
2. Consumers raise their voices against products or services which they feel are unjust.
3. They sometimes force companies to lower prices.
4. They use social media to strongly oppose price increases.
5. They sometimes threaten to stop using product.






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We will provide official answers once we have a few responses to the questions.

Regards,

Rajat Sadana

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Study Daily to conquer GMAT.

IMO Ans are A,B,E,A
OA's pls !

My answer is Q1. (1)
Q2 (2)
Q3 (3)
Q4 (5)
Please explain the correct answer.

It is now time for E-GMAT representative to post the OA.

The passage in out there from 14th June.
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-------Analyze why option A in SC wrong-------

My answers
A
D
C
B

Please post OA's.

For #2 the question says the phrase is used to refer to.... Is confusing me-- does it want an explanation of what that means in the passage or that this phrase is used to refer to the traditional approach of price fixing??

1 - A
2 - D
3 - A
4 - A

Please post the OAs.

IMO ABCB

Wait for OAs!!!!
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Regards
SD
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The passage is primarily concerned with:
1. Analyzing the various advantages and disadvantages of various pricing strategies. nothing is mentioned into the passage about vantages and disadvantages
2. Describing the various aspects of pricing process nope
3. Explaining the importance of humanizing the process of price fixing this is the correct answer
4. Identifying steps to adapt pricing strategy to changing trends. no trends
5. Discussing about the changing trends in consumer behavior with regards to unfair pricing nope

By using the phrase ‘running the numbers’ the author is referring to what practice?
1. Running complex equations on a computer to generate a number to fix the price. no mentioned
2. Making calculations for optimizing profits. no mentioned
3. Making decisions solely based on calculations ignoring unquantifiable variables that may have a greater impact.this is a consequence
4. Using traditional methods for calculation and price fixing. correct, is the technique per se
5. Running simulations on statistical data to fix price. nope

The author of the passage is LEAST likely to make which of the following recommendations to Businessmen.
1. Instead of using pricing for profits, businessmen should use pricing to increase consumer satisfaction. in the right direction toward the customers
2. They should avoid hidden costs and simplify the terms of use of their service for better understanding. idem
3. Businessmen should look at value creation for the consumer too along with traditional strategies for price fixing. the passage say that classic approach is incorrect and here the businessmen should use it ?? correct
4. They should use pricing as an effective means for communicating with customers. idem
5. They should try to position themselves so that they may be able to influence the perceived level of fairness of the price of their product. idem in the last sentence

According to the passage, which of the following describes present day consumer most accurately?
1. Consumers sometimes use modern tools to criticize products and service. nope the passage says: disseminate information about a firm’s prices, exploiting social media platforms to publicize policies that they believe are unfair NOT sometimes
2. Consumers raise their voices against products or services which they feel are unjust. correct
3. They sometimes force companies to lower prices. nope
4. They use social media to strongly oppose price increases. nope
5. They sometimes threaten to stop using product. nope
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KUDOS is the good manner to help the entire community.

My answer is as below :


1 . C

2. C

3. B

4. A