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# A certain automaker aims to increase its market share by

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A certain automaker aims to increase its market share by [#permalink]

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07 Aug 2012, 14:26
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A certain automaker aims to increase its market share by deeply discounting its vehicles prices for the next several months. The discounts will cut into profits, but because they will be heavily advertised the manufacturer hopes that they will attract buyers away from rival manufacturers' cars. In the longer term, the automaker envisions that customers initially attracted by the discounts may become loyal customers.

In assessing the plan's chances of achieving its aim, it would be most useful to know which of the following?

A. Whether the automaker's competitors are likely to respond by offering deep discounts on their own products
C. Whether some of the automaker's models will be more deeply discounted than others
D. Whether the automaker will be able to cut costs sufficiently to maintain profit margins even when the discounts are in effect
E. Whether an alternative strategy might enable the automaker to enhance its profitability while holding a constant or diminishing share of the market

OG2017 CR558
[Reveal] Spoiler: OA

Last edited by hazelnut on 16 Apr 2017, 20:12, edited 2 times in total.
Question was poorly Indented, I corrected.
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Re: A certain automaker aims to increase its market share by [#permalink]

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07 Aug 2012, 14:30
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A.

If the rival manufacturers also discount their vehicles prices then the plan fails.
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Re: A certain automaker aims to increase its market share by [#permalink]

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07 Aug 2012, 14:42
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(A) vs (D)
(A) wins because the plan of acquiring more customers will fail if the competitor starts similar program.
(D) fails because,it is already mentioned that the .."The discounts will cut into profits,...."
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Re: A certain automaker aims to increase its market share by [#permalink]

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10 Aug 2012, 08:12
for D the discounts cut into profits is mentioned agreed . . but what if company starts making loss and get closed before reaping advantages of loyal customers later on . .

Whether the automaker will be able to cut costs
sufficiently to maintain profit margins . .thats the question which is not mentioned in the stimulus. .
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Re: A certain automaker aims to increase its market share by [#permalink]

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14 Sep 2012, 04:20
I have selected option "E" which thinks of alternative strategy of profits. Reason bein
1. It is said that "Discounts cut io profits" , so if the discounted customers do not turn out to be loyal customers
then company may get into losses.
2. For "Option A" , even if the competitor discounts more, situation doesnot improve due to point 1.
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Re: A certain automaker aims to increase its market share by [#permalink]

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14 Sep 2012, 12:08
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Expert's post
(A) Whether the automaker's competitors are likely to respond by offering deep discounts on their own products

The plan is to offer such low prices as to lure customers away from competitors. However, if competitors counter by also lowering the prices of their cars, then consumers no longer have an incentive to switch to the 'certain automaker'. Thus (A) is the answer.

(E) Whether an alternative strategy might enable the automaker to enhance its profitability while holding a constant or diminishing share of the market

We are only focusing on the strategy of lowering the price of cars. Will it work or not? Saying that an alternative strategy may be more effective does not answer this question.
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Re: A certain automaker aims to increase its market share by [#permalink]

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14 Sep 2012, 22:11
(A) Whether the automaker's competitors are likely to respond by offering deep discounts on their own products

Options were pretty straight forward.
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Re: A certain automaker aims to increase its market share by [#permalink]

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27 Oct 2012, 04:19
Pls help in eliminating E.

It talks of an alternative strategy. But I think the effectiveness of it is not discussed.
Am i true
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Re: A certain automaker aims to increase its market share by [#permalink]

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27 Oct 2012, 09:48
Archit143 wrote:
Pls help in eliminating E.

It talks of an alternative strategy. But I think the effectiveness of it is not discussed.
Am i true

Hi Archit

The question asks you to assess the plan's chances of achieving its AIM. What is the aim? The aim is that customers initially attracted by the discounts may become loyal customers.

Do you think option E affects the aim in anyway?

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Last edited by getgyan on 27 Oct 2012, 10:36, edited 1 time in total.
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Re: A certain automaker aims to increase its market share by [#permalink]

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27 Oct 2012, 10:32
getgyan wrote:
Archit143 wrote:
Pls help in eliminating E.

It talks of an alternative strategy. But I think the effectiveness of it is not discussed.
Am i true

Hi Archit

The question asks you to assess the plan's chances of achieving its AIM. What is the aim? The aim is that customers initially attracted by the discounts may become loyal customers.

Do you think option C affects the aim in anyway?

I was not asking to eliminate C... I know thats not affecting the plan but i had confusion with E
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Re: A certain automaker aims to increase its market share by [#permalink]

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27 Oct 2012, 10:36
Archit143 wrote:

I was not asking to eliminate C... I know thats not affecting the plan but i had confusion with E

Sorry I mistakenly wrote C where I intended to write E
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Re: A certain automaker aims to increase its market share by [#permalink]

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01 Apr 2013, 01:55
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This is an evaluate type of a question.

The OA comes down to option A.
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Re: A certain automaker aims to increase its market share by [#permalink]

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24 May 2013, 07:57
The aim is to increase the market share and not on profits.
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Re: A certain automaker aims to increase its market share by [#permalink]

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08 Sep 2013, 12:54
it is an Evaluate the Argument question, and by applying Variance Test, it comes down to answer choice A.

the conclusion states " A certain automaker aims to increase its market share
by deeply discounting its vehicles' prices for the next
several months "

(A) Whether the automaker's competitors are likely
to respond by offering deep discounts on their
own products

applying the variance test

IF YES : if competitors respond in the same way, the automaker's strategy will not have much effect in customers.

IF NO: if competitors do not respond in the same way, then the automaker's strategy will have great probability of success.
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Re: A certain automaker aims to increase its market share by [#permalink]

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17 Mar 2014, 14:20
The question asks: In assessing the plan's chances of achieving its aim, it would be most useful to know which of the following?
According to the passage, the aim is to "increase its market share by deeply discounting its vehicles' prices for the next several months"

Now lets look at (E),
(E) Whether an alternative strategy might enable the automaker to enhance its profitability while holding a constant or diminishing share of the market
The answer choice talks about a strategy to enhance profitability. That was not the aim of the plan. The plan was to "increase market share". Therefore E is not the answer.

For the sake of completeness,

(A) Whether the automaker's competitors are likely to respond by offering deep discounts on their own products
If others also offer the same "strategy" of deep discount, the plan to increase market share will not work. Market share for all competitors will then remain the same.

May impact effectiveness market share plan, but we are not told how good or bad the agency is. Unable to determine.

(C) Whether some of the automaker's models will be more deeply discounted than others
Knowing the discount difference between model A vs B tells us nothing about the potential success of the plan to increase market share

(D) Whether the automaker will be able to cut costs sufficiently to maintain profit margins even when the discounts are in effect
The plan already assumes it will cut into profit for the purpose of increasing market share. The ability to make profit after new lower cost does not tell us however if it will lead to greater market share

Archit143 wrote:
Pls help in eliminating E.

It talks of an alternative strategy. But I think the effectiveness of it is not discussed.
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Re: A certain automaker aims to increase its market share by [#permalink]

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12 Mar 2015, 03:49
betterscore wrote:
A certain automaker aims to increase its market share by deeply discounting its vehicles' prices for the next several months. The discounts will cut into profits, but because they will be heavily advertised the manufacturer hopes that they will attract buyers away from rival manufacturers' cars. In the longer term, the automaker envisions that customers initially attracted by the discounts may become loyal customers.

In assessing the plan's chances of achieving its aim, it would be most useful to know which of the following?

(A) Whether the automaker's competitors are likely to respond by offering deep discounts on their own products
(C) Whether some of the automaker's models will be more deeply discounted than others
(D) Whether the automaker will be able to cut costs sufficiently to maintain profit margins even when the discounts are in effect
(E) Whether an alternative strategy might enable the automaker to enhance its profitability while holding a constant or diminishing share of the market

A it is , If other competitors apply for the same discounts then this company will lose its edge over competition.
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Re: A certain automaker aims to increase its market share by [#permalink]

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01 Dec 2016, 06:05
Hi experts and mikemcgarry

Although I picked up A long time ago, a new question came up when I reviewed this case,

my interpretation of evaluation is that combination strengthen and weaken. when a extreme of the option ( say Yes or 0%, and so on) strengthens the conclusion, then opposite extreme of the option (say No, or 100%, and so on) weaken the conclusion.

for this case, the OA is A Whether the automaker's competitors are likely to respond by offering deep discounts on their own products
extreme : No, none competitors has embarked similar plan, then the plan sounds good, --strengthen

opposite extreme : Yes, some competitors have embarked similar plan,

now, my doubt come up. we do not know the effect of competitors' plan, so there will be two results.
result #1 : competitors' plans were successful, therefore automaker's plan is ineffective -- weaken
result #2 : competitors' plans were unsuccessful, then it is hard to say whether automaker's plan will be successful or not -- neither weaken nor strengthen.

above reasoning seems not works as strengthen or weaken...

struggling~~~~
genuinely want you to clarify

have a nice day
>_~

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Re: A certain automaker aims to increase its market share by [#permalink]

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16 Apr 2017, 20:11
betterscore wrote:
A certain automaker aims to increase its market share by deeply discounting its vehicles prices for the next several months. The discounts will cut into profits, but because they will be heavily advertised the manufacturer hopes that they will attract buyers away from rival manufacturers' cars. In the longer term, the automaker envisions that customers initially attracted by the discounts may become loyal customers.

In assessing the plan's chances of achieving its aim, it would be most useful to know which of the following?

A. Whether the automaker's competitors are likely to respond by offering deep discounts on their own products
C. Whether some of the automaker's models will be more deeply discounted than others
D. Whether the automaker will be able to cut costs sufficiently to maintain profit margins even when the discounts are in effect
E. Whether an alternative strategy might enable the automaker to enhance its profitability while holding a constant or diminishing share of the market

OG2017 CR558 P514

Discounted Vehicles

Step 1: Identify the Question

This question asks which answer would be most useful to know in assessing the plan, so this is an Evaluate the Argument question.

Step 2: Deconstruct the Argument

Discounts → increase MS
But drop in profit
Note: MS is an abbreviation for market share.

Step 3: Pause and State the Goal

This argument presents a plan, and all steps of the plan must work for the plan to achieve its aim. Do any specific aspects of the plan seem questionable or unlikely to work? On Evaluate questions, the answer should be something that is important to know to decide if the plan will in fact work as stated in the argument.

Step 4: Work from Wrong to Right

(A) CORRECT. If competitors cut prices in response, the automaker is unlikely to gain much market share from its price cuts, weakening the argument. If competitors would not respond in this way, at least the first step of the plan is more likely to work (price cuts lead to gains in market share), strengthening the argument.
(B) In order for the plan to work the advertising campaign must attract buyers, but the advertising agency that creates these ads is not relevant.
(C) In order for the plan to work, the discounts must attract customers. The relationship between the levels of discounts on different models of cars, however, does not address whether the discounts will be effective.
(D) The argument acknowledges that the plan will initially cut into profits; the plan focuses on increasing long-term profits. Whether the company is able to maintain short-term profits through cost cuts is thus not important to the success of the stated plan.
(E) This question asks about the specific plan in the argument achieving its aim. Other plans to improve profitability are not relevant.
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Re: A certain automaker aims to increase its market share by   [#permalink] 16 Apr 2017, 20:11
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