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Pricing is the most influential medium of communication that

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Pricing is the most influential medium of communication that [#permalink] New post 13 Jun 2012, 13:47
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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2011 that it would start charging a $5 monthly debit card fee, the public outcry was so intense that the bank soon rescinded the plan.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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Re: Fresh Passage- Pricing in the 21st Century [#permalink] New post 13 Jun 2012, 22:51
Seems like an easy passage with easy questions , but the options ( especially in Q2 and Q4) are really similar .

I'm not really interested in see how many answers I got right/wrong but I'm more interested to see if my reasoning is correct . I would really appreciate it if the E-gmat team could explain all the options in each question !


1.The passage is primarily concerned with:

(a) Analyzing the various advantages and disadvantages of various pricing strategies.
Only analyzes the advantages and disadvantages of one strategy ( in the second paragraph ) . In the other paragraphs only the advantages are mentioned .

(b) Describing the various aspects of pricing process
Does'nt really describe "various aspects" of the pricing process . The passage mainly focuses on showing how price fixing should not merely be used to optimize short term profits.


(c) Explaining the importance of humanizing the process of price fixing
I feel this is the main point . In the second paragraph , the author says what would happen if price fixing is not "humanized " and then the subsequent paragraphs show the benefits of humanizing the process of price fixing .


(d) Identifying steps to adapt pricing strategy to changing trends.
Yes this could be the answer , but I feel this depicts the logical structure more rather than fixating on the main point.


(e) Discussing about the changing trends in consumer behavior with regards to unfair pricing

Too specific . This is dealt with only in the second paragraph .


The next question was a bit difficult because nearly all the options seem correct , so I was a bit lost.

2.By using the phrase ‘running the numbers’ the author is referring to what practice?

(a) Running complex equations on a computer to generate a number to fix the price.

Hmmm...does it necessarily have to be "Complex equations " ? I could just run "Simple equations " also right ? Probably not the correct option.

(b) Making calculations for optimizing profits.

This could be the answer but I'm not sure if you can generalize to say "optimize profits" , because profits could be either long term or short term .


(c) Making decisions solely based on calculations ignoring unquantifiable variables that may have a greater impact.

"Running numbers" actually refers to the act of "calculating " and not "Decision making".So this is incorrect.

(d) Using traditional methods for calculation and price fixing.

Seems like a typical GMAT "boring" inference answer . But maybe this answer choice is too boring

(e) Running simulations on statistical data to fix price.

I would pick this answer if this were a real world situation . I would probably pick this as the correct option here as well.

3.The author of the passage is LEAST likely to make which of the following recommendations to Businessmen.

(a) Instead of using pricing for profits, businessmen should use pricing to increase consumer satisfaction.

I feel this is the correct option.

(b) They should avoid hidden costs and simplify the terms of use of their service for better understanding. \

Mentioned in the last paragraph

(c) Businessmen should look at value creation for the consumer too along with traditional strategies for price fixing.

Line 2 of paragraph 2 mentions that traditional methods must not solely be used . In paragraph 3 the author mentions that value creation should be used . So the author implies that both methods should be incorporated.

(d) They should use pricing as an effective means for communicating with customers.

Rephrase of the First Paragraph .

(e) 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

Mentioned in the last line of the passage.

4.According to the passage, which of the following describes present day consumer most accurately?

(a) Consumers sometimes use modern tools to criticize products and service.

I don't think we can assume "social media" to be a modern tool . Social media could've been there in the past , but it's been used only now.

(b) Consumers raise their voices against products or services which they feel are unjust.

Can "unjust products or services " be equated to "unjust policies " ? Probably not.

(c) They sometimes force companies to lower prices.

Very difficult to pick between (B) and (C) . But I think (C) is correct because there is actually one instance of a Company that lowered the price ( actually the company eliminated the price altogether ).


(d) They use social media to strongly oppose price increases.

The passage says that they use social media to oppose policy that they feel are unjust . So these unjust policy need not imply price increase , it could be other things as well.

(e) They sometimes threaten to stop using product.

There's no mention of a "threat" , there is only a mention of them completely abandoning the company .
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Re: Fresh Passage- Pricing in the 21st Century [#permalink] New post 14 Jun 2012, 07:03
egmat wrote:
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: [highlight]Answer 2[/highlight] Passage is describing all about pricing strategy.1st para is giving introduction.2nd para is telling abt unfair pricing process.3 para is telling how to maintain balance b/w profit and cust. satisfaction.
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? [highlight]Answer 2[/highlight] bcoz traditional approach is using running no. technique.So the correct answer should only be describing the process used by traditional way.
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. WRONG because it describes traditional approach not the runnning no.s
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. [highlight]Answer 1[/highlight]Check each statement 1 by1.
1. Instead of using pricing for profits, businessmen should use pricing to increase consumer satisfaction. Author suggest to have balance b/w 2 not to adopt only 1 practice
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? [highlight]Answer 3[/highlight] clear by the BOA example
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,

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Re: Fresh Passage- Pricing in the 21st Century [#permalink] New post 14 Jun 2012, 07:16
Someone please post the OA !!
I got ABEB
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Re: Fresh Passage- Pricing in the 21st Century [#permalink] New post 15 Jun 2012, 10:43
IMO Ans are A,B,E,A
OA's pls !
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Re: Pricing is the most influential medium of communication that [#permalink] New post 27 Jun 2012, 00:53
Question 1:

The main point of the passage is to explain the new strategy: humanizing the process of pricing. Passage also explains the advantages of such process and criticizes traditional process of price fixing.

IMO C

Question 2:

Para 2 starts with the sentence"The traditional approach for fixing the price by ‘running the numbers’ only aims at maximizing short term profits" ' IMO running the numbers means calculating the price solely based on the cost and profit parameters ignoring qualitative variables such as customer satisfaction.

IMO C

Question 3:

In para 3 and 4 author list most of the recommendation for business regarding pricing strategy. IMO author is list likely to recommend option A.

Question 4:

In para 2 author explains how modern day consumer spread the information about unwise pricing using social media web sites.

IMO D
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Re: Pricing is the most influential medium of communication that [#permalink] New post 05 Jul 2012, 23:59
My answer is Q1. (1)
Q2 (2)
Q3 (3)
Q4 (5)
Please explain the correct answer.
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Re: Pricing is the most influential medium of communication that [#permalink] New post 06 Jul 2012, 07:00
My choices are: ABEC
Please Post the OA
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Re: Pricing is the most influential medium of communication that [#permalink] New post 08 Jul 2012, 22:47
It is now time for E-GMAT representative to post the OA.

The passage in out there from 14th June.
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Re: Pricing is the most influential medium of communication that [#permalink] New post 11 Jul 2012, 10:19
My Take is:
A
C
A
B.
Please post the OA asap. Anxiety levels are rising minute by minute. Seems not a difficult passage but a good one. goodgmoderate

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Re: Pricing is the most influential medium of communication that [#permalink] New post 26 Jul 2012, 17:04
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??
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Re: Pricing is the most influential medium of communication that [#permalink] New post 31 Jul 2012, 17:26
My answers were
C
D
E(or probably A)
B
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Re: Pricing is the most influential medium of communication that [#permalink] New post 31 Jul 2012, 22:51
1 - A
2 - D
3 - A
4 - A

Please post the OAs.
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Re: Pricing is the most influential medium of communication that [#permalink] New post 04 Aug 2012, 07:46
My choices are A, C, C, and B.

RC is quite long to me to provide all reasoning. This is only practice and I want to hear the explanation from great guy e-GMAT
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Re: Pricing is the most influential medium of communication that [#permalink] New post 06 Aug 2012, 08:32
IMO ABCB

Wait for OAs!!!!
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Re: Pricing is the most influential medium of communication that [#permalink] New post 22 Oct 2012, 12:05
hi, CCAB

when will the correct answers be psoted?
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Re: Pricing is the most influential medium of communication that [#permalink] New post 22 Oct 2012, 17:20
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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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Re: Pricing is the most influential medium of communication that [#permalink] New post 30 Oct 2012, 10:42
e-gmat team could you please let us know the answers for these questions...?

Cheers
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Re: Pricing is the most influential medium of communication that [#permalink] New post 26 Nov 2012, 22:08
My answer is as below :


1 . C

2. C

3. B

4. A
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Re: Pricing is the most influential medium of communication that [#permalink] New post 10 Jan 2013, 08:53
egmat wrote:
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.




Image

Looking for more practice with audio visual responses. Try out the e-GMAT RC free trial. The free trial has 8-9 passages; 4 in the diagnostic and the rest in the main point concept and application file. You also have a beautifully crafted video solution with each passage.

Click Image to start your free trial


Click Image to hear the testimonials from our beta trial users



Image

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

Regards,

Rajat Sadana





Provide us OA
:)
Re: Pricing is the most influential medium of communication that   [#permalink] 10 Jan 2013, 08:53
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For most consumers, the price of automobile insurance sgrover 15 21 Sep 2005, 21:47
Professor: Members of most species are able to communicate WinWinMBA 5 26 May 2005, 11:14
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