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# 7th AWA. Experts please grade! GMAT in THREE days!!!

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Manager
Joined: 15 Apr 2013
Posts: 61

Kudos [?]: 26 [1], given: 43

Concentration: Human Resources, International Business
GMAT 1: 570 Q44 V25
GPA: 3
7th AWA. Experts please grade! GMAT in THREE days!!! [#permalink]

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24 Oct 2013, 09:02
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Dear experts,

Kindly grade my essay. Your feedback is highly valuable and much appreciated. Thanks and kudos in advance!

The following appeared in a corporate memorandum of a beverage manufacturer:

“Our promotional price reductions on energy drinks have been highly successful, as we have seen a dramatic increase in unit sales. Further, surveys of our consumers indicate that this promotion was favorably received by the majority of our customers. Therefore, to improve our company’s profitability and enhance its perception in the eyes of consumers, similar price reductions should be offered on all drinks produced by our firm.”

Discuss how well reasoned etc.

In the passage above, it is argued by the author that because of promotional price reductions on energy drinks there has been a dramatic increase in unit sales of those energy drinks. The author states that to improve the company's profitability and enhance its perception in the eyes of consumers, similar price reductions should also be offered on all drinks produced by the firm. However, on a deeper analysis, it becomes apparent that certain important and relevant aspects have not been taken into account, leading to a number of mistaken assumptions and logical flaws.

One such flaw is the author's assumption that a 'dramatic' increase in unit sales is just because of promotional price reductions. This statement is a stretch as the author has not taken into account any other factor that could have led to a 'dramatic' increase in the unit sales of the energy drink. For example, an increase in unit sales could be a result of an increased overall demand of energy drinks because of the summer season when there is a high demand for energy drinks to seek respite from scorching heat. The argument could have been much stronger if the author had provided relevant and valid data to justify that the increased demand of the energy drink was a result of promotional price reduction.

The author claims that to improve company's profitability and enhance its perception in the eyes of consumers, similar price reductions should be made on all drinks produced by the firm. This is again a very weak and unsupported claim as the author has not mentioned anything about the cost of production. In order to increase profitability it is essential that either the cost of production is lessened or at least kept at the same level because if prices are reduced and cost of production rises then the company will have to face losses. In order to strengthen the argument the author could have provided data regarding the levels of cost of production and the effects of price reductions in the profitability.

Even if the author's assumption, that promotional price reductions assure profitability, were to be true the author wrongly assumes that what stands true for energy drinks will stand true for all drinks produced by the firm. The author has failed to take into account several factors that need to be analyzed while opting a strategy for particular products. Factors such as share of the other drinks in the total revenue of the firm, cost of production of other drinks, popularity and demand of other drinks, targeted customer segment of other drinks etc. For example, if 'Drink X' contributes to only 5% of the firms total revenue then it won't contribute substantially towards the profitability of the firm. On the other hand, if Drink Y contributes to nearly 50% of the firms revenue but due to a decrease in price its sale results in losses, it will affect the overall profitability of the firm.

In conclusion, the argument is flawed for the above mentioned reasons and it is therefore unconvincing. It could be reasonably strengthened if the author mentioned all relevant factors such as, data analyzing the increase in sales of the energy drink, correlation between profitability and cost of production and contribution of drinks other than the energy drink in the total revenue of the firm. In order to assess the merit of a particular situation it is essential to have full knowledge of all the contributing factors. In this case, the ones mentioned above. Without this information the argument remains unsubstantiated and open to debate.

Kudos [?]: 26 [1], given: 43

Manager
Joined: 23 Oct 2013
Posts: 75

Kudos [?]: 16 [0], given: 35

Location: India
Concentration: General Management, Strategy
GMAT 1: 680 Q46 V36
GPA: 3.95
WE: Research (Telecommunications)
Re: 7th AWA. Experts please grade! GMAT in THREE days!!! [#permalink]

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24 Oct 2013, 10:23
KanupriyaS wrote:
Dear experts,

Kindly grade my essay. Your feedback is highly valuable and much appreciated. Thanks and kudos in advance!

The following appeared in a corporate memorandum of a beverage manufacturer:

“Our promotional price reductions on energy drinks have been highly successful, as we have seen a dramatic increase in unit sales. Further, surveys of our consumers indicate that this promotion was favorably received by the majority of our customers. Therefore, to improve our company’s profitability and enhance its perception in the eyes of consumers, similar price reductions should be offered on all drinks produced by our firm.”

Discuss how well reasoned etc.

In the passage above, it is argued by the author that because of promotional price reductions on energy drinks there has been a dramatic increase in unit sales of those energy drinks. The author states that to improve the company's profitability and enhance its perception in the eyes of consumers, similar price reductions should also be offered on all drinks produced by the firm. However, on a deeper analysis, it becomes apparent that certain important and relevant aspects have not been taken into account, leading to a number of mistaken assumptions and logical flaws.

One such flaw is the author's assumption that a 'dramatic' increase in unit sales is just because of promotional price reductions. This statement is a stretch as the author has not taken into account any other factor that could have led to a 'dramatic' increase in the unit sales of the energy drink. For example, an increase in unit sales could be a result of an increased overall demand of energy drinks because of the summer season when there is a high demand for energy drinks to seek respite from scorching heat. The argument could have been much stronger if the author had provided relevant and valid data to justify that the increased demand of the energy drink was a result of promotional price reduction.

The author claims that to improve company's profitability and enhance its perception in the eyes of consumers, similar price reductions should be made on all drinks produced by the firm. This is again a very weak and unsupported claim as the author has not mentioned anything about the cost of production. In order to increase profitability it is essential that either the cost of production is lessened or at least kept at the same level because if prices are reduced and cost of production rises then the company will have to face losses. In order to strengthen the argument the author could have provided data regarding the levels of cost of production and the effects of price reductions in the profitability.

Even if the author's assumption, that promotional price reductions assure profitability, were to be true the author wrongly assumes that what stands true for energy drinks will stand true for all drinks produced by the firm. The author has failed to take into account several factors that need to be analyzed while opting a strategy for particular products. Factors such as share of the other drinks in the total revenue of the firm, cost of production of other drinks, popularity and demand of other drinks, targeted customer segment of other drinks etc. For example, if 'Drink X' contributes to only 5% of the firms total revenue then it won't contribute substantially towards the profitability of the firm. On the other hand, if Drink Y contributes to nearly 50% of the firms revenue but due to a decrease in price its sale results in losses, it will affect the overall profitability of the firm.

In conclusion, the argument is flawed for the above mentioned reasons and it is therefore unconvincing. It could be reasonably strengthened if the author mentioned all relevant factors such as, data analyzing the increase in sales of the energy drink, correlation between profitability and cost of production and contribution of drinks other than the energy drink in the total revenue of the firm. In order to assess the merit of a particular situation it is essential to have full knowledge of all the contributing factors. In this case, the ones mentioned above. Without this information the argument remains unsubstantiated and open to debate.

Hi KanupriyaS,

I would rate your essay to 5.5 . It is well structured and nicely written. The one thing that you can work upon is : writing shorter sentences. It helps to avoid run-on sentences and keeps the reader interested in content.

Good Luck

Please press KUDOS button on the left if my post helped you..
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Kudos [?]: 16 [0], given: 35

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Re: 7th AWA. Experts please grade! GMAT in THREE days!!! [#permalink]

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31 Oct 2013, 17:48
I like it -- I'd say it's in the 5.0 range (+/- 0.5pts). Be careful of sentences that get a bit long and may cause some confusion by the grader -- i.e. the first sentence of the fourth paragraph.

Hope this helps!

-Brian
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Brian Lange | Manhattan GMAT Instructor | North Carolina

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Kudos [?]: 28 [0], given: 0

Re: 7th AWA. Experts please grade! GMAT in THREE days!!!   [#permalink] 31 Oct 2013, 17:48
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# 7th AWA. Experts please grade! GMAT in THREE days!!!

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