Marketing analyst: Several small businesses complain that offering online discount coupons reduces their revenue, since customers who use the coupons pay less. However, companies that have issued such coupons in the past year have seen substantial growth in overall sales. Moreover, there is a strong correlation between increases in the number of coupon downloads and increases in a company’s monthly revenue. Therefore, offering online discount coupons clearly increases sales rather than reduces them. The analyst’s reasoning is most vulnerable to criticism on which of the following grounds? A. It overlooks the possibility that two correlated trends may result from an independent factor rather than one causing the other. B. It assumes, without justification, that customers who use coupons would not have purchased goods at full price. C. It fails to consider that increased revenue does not necessarily imply increased profits. D. It presumes that the growth in overall sales occurred only after coupons were introduced. E. It ignores the possibility that businesses offering coupons differ in important ways from those that do not. V40-04

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12 Days of Christmas GMAT Competition 2025 - Day 1: Marketing analyst:

1 2 3 4 5

firefox300

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16 Dec 2025, 08:30

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A: Says correlation might not mean causation: possible, but not the main problem.

B: Talks about what customers would have done without coupons: not required for the argument.

C: Points out that higher revenue does not automatically mean higher profits: this directly attacks the conclusion.

D: Talks about timing: not essential.

E: Talks about differences between businesses: less central than the profit vs. revenue issue.

The correct answer is C

akrutij

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Option 3
directly attacks the core logic
coupons reduce price = lower margins
higher sales or revenue not equal to higher profits
which can easily affect the profit
Argument only shows revenue and sales

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16 Dec 2025, 09:10

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Its not a trap its a double bluff

AbhishekP220108

This is a classic GMAT trap. The test-maker is banking on you treating "Revenue" and "Profit" as the same thing. They aren't.
The answer is (C).

Here is the simple logic:
The analyst proves that Revenue (total money coming in) is up.
Then they jump to the conclusion that Profit (money you keep) is up.

Why that’s wrong:
Think about it this way: You could open a store selling iPhones for $10 each.
Would your Revenue go up? Absolutely.
You’d have a line around the block. You’d be bringing in cash hand over fist.

Would your Profit go up? No. You’d be losing hundreds of dollars on every single phone. You’d go bankrupt in a week.

That’s exactly what Option (C) points out. Coupons might drive huge sales numbers (Revenue), but because you are lowering the price, your margins might get crushed, meaning you actually make less profit.

Why the others are incorrect traps:
A (Correlation/Causation): This is a standard GMAT flaw, but in this specific prompt, the "Revenue vs. Profit" error is more immediate. Even if the coupons definitely caused the revenue increase (so A is not the issue), the conclusion about profit would still be wrong.
B (Cannibalization): This explains why profits might drop (existing customers paying less), but Option C is the broader logical bucket that contains this idea.
D (Timing): This attacks the timeline, but the core issue is the math, not the calendar.
E (Sample Bias): This attacks the data source. While valid, it is not as devastating as the fundamental misunderstanding of business math in Option C.

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16 Dec 2025, 09:37

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This is a classic flaw.
Given that "A" caused "B".
Weakener: " C" causes both A and B

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Updated on: 24 Dec 2025, 08:06

Originally posted by ManifestDreamMBA on 16 Dec 2025, 10:58.
Last edited by ManifestDreamMBA on 24 Dec 2025, 08:06, edited 1 time in total.

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There seems to be some confusion here. Is the correct answer A or C? Official explanation and answer choice say A but all the answer choices with C (seems logical too) as answer are awarded.

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Marketing analyst: Several small businesses complain that offering online discount coupons reduces their revenue, since customers who use the coupons pay less. However, companies that have issued such coupons in the past year have seen substantial growth in overall sales. Moreover, there is a strong correlation between increases in the number of coupon downloads and increases in a company’s monthly revenue. Therefore, offering online discount coupons clearly increases profits rather than reduces them.

A. It overlooks the possibility that two correlated trends may result from an independent factor rather than one causing the other.
Correct, because the overall sales and revenue increase despite the coupons could be a factor of something else; and not a direct impact of coupons. There can be several marketing elements at play, or just the fact that a celebrity endorsed a product because they liked it! Can be anything. This weakens the analyst's stance.

B. It assumes, without justification, that customers who use coupons would not have purchased goods at full price.
if they did purchase goods at full price, even then there is no direct connect between these coupons and total increase in sales. We don't know if the total value of the coupons and that of sales is the same.

C. It fails to consider that increased revenue does not necessarily imply increased profits.
This usually works as an answer to most questions 😄 however, here if you notice, the entire question says revenue and at the end the argument concludes saying profit. However, the core argument was concluded about revenue even before this statement, the analyst's focus is revenue throughout not profit, so there is no confusion.

D. It presumes that the growth in overall sales occurred only after coupons were introduced.
The argument says 'companies that have issued such coupons in the last year' when the coupons were introduced is not mentioned, and overall sales for the year are considered.

E. It ignores the possibility that businesses offering coupons differ in important ways from those that do not.
this is not a weakness given that the comparison is between the business' own sales this year vs last.