The market for the luxury-goods industry is on the decline : Analytical Writing Assessment (AWA)
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# The market for the luxury-goods industry is on the decline

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31 May 2012, 12:10
** Note: Explanations for scoring would be much appreciated!

Prompt: "The market for the luxury-goods industry is on the decline. Recent reports show that a higher unemployment rate, coupled with consumer fears, has decreased the amount of money the average household spends on both essential and nonessential items, but especially on nonessential items. Since luxury goods are, by nature, nonessential, this market will be the first to decrease in the present economic climate, and luxury retailers should refocus their attention to lower-priced markets."

The argument that luxury retailers should divert their attention to lower-priced markets is logically unconvincing due to its reliance on flawed assumptions. In fact three especially egregious logical errors bear negatively on the argument's reasoning, including a mistaken analogy, uncertain causation, and an unsupported extreme premise.

First the argument cites recent reports of a decline in the amount of money being spent particularly on nonessential items as support for the conclusion that the luxury market is on the decline. However, it is unclear whether the report even included any information on the average household's spending habits regarding luxury items. Although luxury goods ostensibly can be considered nonessential items, such a classification does not logically entail that they were included in the report on the average household's nonessential item spending. In fact, it's possible that the report only included information on the consumption of particular nonessential items, which might not have even included luxury items at all, and thus we would be unable to make any reasonable conclusion about the luxury market. Therefore, in order for the author to strengthen his or her argument, it is necessary that he or she include evidence for a decrease in the average household's spending on luxury items, specifically.

Moreover, even if we assume luxury items were considered apart of the nonessential items in the report, the argument's conclusion still relies on tenuous support. For instance, the author argues that luxury retailers should divert their attention to lower-priced markets, however, it is unclear if this would even be beneficial given the evidence the author provides. If consumers have indeed decreased the amount of money they are spending on luxury items, how much have they decreased? Are they still spending enough to purchase luxury goods at their current selling price? Will lowering that selling price actually improve the economic profits of luxury retailers? If the average household is still spending enough on luxury goods to afford their current selling price, it does not logically follow that lowering that selling price will make them purchase any more than they already are. For the author to effectively argue that luxury retailers should focus on lower-priced markets, he or she needs to provide evidence that shows that the average household's budget does not allow them to afford current luxury item sale prices.

Finally, the author embarks on the extreme, and unfounded, intermediate conclusion that the luxury market will be the first to decline in the current economic climate. Even if all of the other unstated assumptions of the argument can be found supported and spending on luxury items is actually decreasing, we are given no adequate evidence that the luxury market will be the first nonessential market to be hit by the economic downturn. Perhaps other nonessential item markets will suffer, but then the unemployment rate will increase and consumers' fears will be ameliorated, and the luxury market will never even experience any losses. For the author to effectively express this line of reasoning, he or she would have to demonstrate that when the average household's spending is decreasing, the first place budget cuts are made are on the household's luxury spending. Only then could there be evidence that the luxury market will be hit first, and a more compelling reason for luxury retailers to refocus on lower-priced markets.

In conclusion, the author fails to logically argue that luxury retailers should focus on lower-priced markets as opposed to their current market. Due to the flawed analogy, vague assumptions of causation, and an unsupported extreme line of reasoning, the argument made is neither cogent nor effective.
The market for the luxury-goods industry is on the decline   [#permalink] 31 May 2012, 12:10
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The following appeared in a market research report examining 4 01 Mar 2011, 19:47
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# The market for the luxury-goods industry is on the decline

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