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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
(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
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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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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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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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14 Sep 2012, 12:08
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(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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Updated on: 27 Oct 2012, 10:36
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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First Attempt 710 - http://gmatclub.com/forum/first-attempt-141273.html
Originally posted by getgyan on 27 Oct 2012, 09:48.
Last edited by getgyan on 27 Oct 2012, 10:36, edited 1 time in total.
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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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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.
(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
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
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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 (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
A it is , If other competitors apply for the same discounts then this company will lose its edge over competition.
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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...
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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 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
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.
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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13 Jun 2018, 03:05
thevenus wrote:
(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,...."
D is wrong because the aim is to increase the market share. Not to make quick profits.
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88% (01:05) correct 
