A certain automaker aims to increase its market share by deeply

Question

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

(B) Whether the advertisements will be created by the manufacturer's current advertising agency

(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

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.

ChrisLele · Accepted Answer

(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.

thevenus · Answer

(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,...."

mojorising666 · Answer

A.

If the rival manufacturers also discount their vehicles prices then the plan fails.

PUNEETSCHDV · Answer

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. .

Archit143 · Answer

Pls help in eliminating E.

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

Aldossari · Answer

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.

kelvinp · Answer

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.

(B) Whether the advertisements will be created by the manufacturer's current advertising agency
  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

BillyZ · Answer

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
© create loyal cust
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.

HimanshuW11 · Answer

Argument Analysis: 
Aim of Automaker: To increase its market share by deeply discounting its vehicles prices for the next several months.
Premises: 
1. 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.
 The automaker explicitly mentions that the intended step would cut into the profits, but bring the customers from the rival car manufacturers 
2. In the longer term, the automaker envisions that customers initially attracted by the discounts may become loyal customers.
 He intends to earn from the customers once they become the loyal customers of his brand.

This is an evaluate question and an answer in yes/no or a +ve/-ve as per the demand of the answer option would strengthen the belief in the answer choice. If a +ve and -ve take answers into two different directions i.e. one strengthens and other weakens argument conclusion/aim.

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

(B) Whether the advertisements will be created by the manufacturer's current advertising agency

(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

saby1410 · Answer

VeritasKarishma   abhimahna 
Is my understanding of passage is correct?
Goal- to increase the market share.
how to achieve goal?
1.By deeply discounts on vehicles.
2.the vehicles will be highly advertised which will also attract customers from rival competitors.
how discounts will be converted into profits?
the customers which would get attracted may become loyal from which automakers cover up their profits.

i do have doubt regarding option D
option d-this will not impact our aim(to increase market share) because whether profit margins maintained or not during discounts will not have any impact to attract customers.

also explain why "BUT"(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. ) is used. what is the contrast.

THANKS

KarishmaB · Answer

(D) is irrelevant. The aim is to increase market share, not maintain profits. So what happens to cost and profits is irrelevant for this argument.

Also, 'BUT' shows the cons vs pros of the plan.

The profits will be cut (con) BUT more buyers will be attracted away from rivals (pro).

CEdward · Answer

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 
Correct. The automaker’s plan is predicated on this idea that they would be able to attract buyers away from their rivals and hopefully in the long term those customers are loyal. The plan’s success would directly affect be affected whether the manufacturer’s advertising efforts could still entice customers who are being retained by the competitors own discounts.

(B) Whether the advertisements will be created by the manufacturer's current advertising agency X
Neither here nor there.

(C) Whether some of the automaker's models will be more deeply discounted than others X
-Not impactful on the argument

(D) Whether the automaker will be able to cut costs sufficiently to maintain profit margins even when the discounts are in effect X
-Again think about the plan…attracting customers…profits are secondary here…

(E) Whether an alternative strategy might enable the automaker to enhance its profitability while holding a constant or diminishing share of the market X
-“Alternative strategy” is irrelevant

errorlogger · Answer

Here are my 2 cents.
First, increasing market share is not the only goal. Winning rival competitor's customers and making them as own company's loyal customers is there long term goal.

Are we really concerned about the company would be able to give such discounts while maintaining profits? Why not, you may ask? It's clearly stated in the para that " The discounts will cut into profits "

luzitao630 · Answer

Is option B repeat the premise, since the statement have already pointed out that “they will be heavily advertised.”

Abhishek009 · Answer

It is completely out of scope , who prepares the artivising agency as it has no role in increasing the market share...

Arthurito · Answer

I dont understand why it's A.

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

Ok fine but the plan could still work, even if the competitors do similar discounts. Even if it's OG it's not a good question to me because A is not a good reason for the plan to fail

A_Nishith · Answer

(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.

A certain automaker aims to increase its market share by deeply

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A certain automaker aims to increase its market share by deeply

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