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Surveys show that every year only 10 percent of cigarette [#permalink]
 13 May 2004, 08:53
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Surveys show that every year only 10 percent of cigarette smokers switch brands. Yet the manufacturers have been spending an amount equal to 10 percent of their gross receipts on cigarette promotion in magazines. If follows from these figures that inducing cigarette smokers to switch brands did not pay, and that cigarette companies would have been no worse off economically if they had dropped their advertising.
Of the following, the best criticism of the conclusion that inducing cigarette smokers to switch brands did not pay is that the conclusion is based on
(A)past patterns of smoking and may not carry over to the future
(B)figures for the cigarette industry as a whole and may not hold for a
particular company
the answer is B, but I would like to know why not A, thank you.
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Manager
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Re: Qestion about SC:AD [#permalink]
13 May 2004, 09:27
chunjuwu wrote: Surveys show that every year only 10 percent of cigarette smokers switch brands. Yet the manufacturers have been spending an amount equal to 10 percent of their gross receipts on cigarette promotion in magazines. If follows from these figures that inducing cigarette smokers to switch brands did not pay, and that cigarette companies would have been no worse off economically if they had dropped their advertising.
Of the following, the best criticism of the conclusion that inducing cigarette smokers to switch brands did not pay is that the conclusion is based on
(A)past patterns of smoking and may not carry over to the future
(B)figures for the cigarette industry as a whole and may not hold for a
particular company
the answer is B, but I would like to know why not A, thank you.
Because switching did not PAY, no connection to future events here!
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Excuse me,
You mean that Choice A is wrong because it involves the idea "future" that doesn't show in the above passage?
Why I cannot say that the patterns of smoking may change in the future as the criticism?
Could you speak more clear? Thank you.
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Manager
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chunjuwu wrote: Excuse me,
You mean that Choice A is wrong because it involves the idea "future" that doesn't show in the above passage?
Why I cannot say that the patterns of smoking may change in the future as the criticism?
Could you speak more clear? Thank you.
The argument that consumers will change their tastes in the future is really weak when it comes to explanation of the reasons for not changing their tastes in the past. I think it is really much like an out-of-scope answer.
The reference to the future events does not say anything about "why consumers didn't change their preferences in the PAST?". OUT-OF-SCOPE.
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SVP
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Let me hop in here.
Assume 100000 people smoke and there are 5 companies A,B,C,D,E making cigarettes. If A holds 90% of the market share and 10% is shared equally by B,C,D,E then they each serve 2500 people.
But they are trying to get hold of 10000 (10% of 100000 ) people by spending $250 ( assumng 1 person smokes once and it costs $1 per cigarette)
What they are spending is very little comapred to what they potentially can get.
I forgot to add one more thng. The argument is probably right about company A spending its 10% revenue on advertising. But this is not applicable to B,C,Dand E because they have a lot of ground to cover.
This is what B is saying.
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VP
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Thank you, anandnk
You mean that in your case it is not worthwhile for company A to spend lots of money on attracting new but few consumers.
But for company B,C,D, it is worthwhile to spend little because their revenue have been low. That is, each company has its condition. Right?
Then, do you think that choice A is out of scope?
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SVP
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I am not sure if A is out of scope because the survey always indicates something about the past or till date unless the survey asks what people are going to do in future.
I just feel B is better than A because of its narrow scope.
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