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E
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Difficulty:
95%
(hard)
Question Stats:
35% (01:57) correct
65%
(01:58)
wrong
based on 799
sessions
History
Date
Time
Result
Not Attempted Yet
Automobile manufacturers often offer incentive programs through which they discount the price of a car to their dealers for a promotion period when the product is advertised to consumers. Such incentive programs often result in a dramatic increase in the amount of product sold by the automobile manufacturers to dealers but may hurt the manufacturers' profitability.
Which of the following, if true, most strongly supports an argument for the incentive programs?
A. The amount of discount generally offered by manufacturers to dealers is carefully calculated to represent the minimum needed to draw consumers' attention to the product.
B. For many consumer products, the period of advertising discounted prices to consumers is about a week, which is not sufficiently long for consumers to become used to the sale price.
C. More prestigious auto makers do not use incentive programs because they dilute the company's brand name.
D. During such a promotion, retailers tend to accumulate in their warehouses inventory bought at discount; they then sell much of it later at their regular price.
E. If a manufacturer fails to offer such promotion but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product.
Which of the following, if true, most strongly supports an argument for the incentive programs?
A. The amount of discount generally offered by manufacturers to dealers is carefully calculated to represent the minimum needed to draw consumers' attention to the product.
B. For many consumer products, the period of advertising discounted prices to consumers is about a week, which is not sufficiently long for consumers to become used to the sale price.
C. More prestigious auto makers do not use incentive programs because they dilute the company's brand name.
D. During such a promotion, retailers tend to accumulate in their warehouses inventory bought at discount; they then sell much of it later at their regular price.
E. If a manufacturer fails to offer such promotion but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product.
nusmavrik
Joined: 26 Nov 2009
Last visit: 03 Apr 2022
Posts: 467
Given Kudos: 36
Status:Impossible is not a fact. It's an opinion. It's a dare. Impossible is nothing.
Affiliations: University of Chicago Booth School of Business
Location: Singapore
Concentration: General Management, Finance
Schools: Chicago Booth - Class of 2015
25 Jul 2010, 00:36
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This is the reason I am going back to the OG, its the best book ever written. I am not gonna focus on any other source. First the argument is a copy of the one in the OG. Second OA is E.
This is such a subtle question. There are TWO parts of the conclusion. The question wants to strengthen just the first part (increased product sales) Not the second (how the manufacturer's profitability is impacted) part.
Which of the following, if true, most strongly supports an argument for the incentive programs? -----> means tick on the answer which strengthens the "incentive program" of the MANUFACTURER. (in favor of the manufacturer)
D is NOT in favor of the manufacturer. It works in favor of the dealers. Dealers cut the profitability. It strengthens the second part of the conclusion.
E says there is a risk by not offering the promotion. E works in favor of the manufacturer - increased sales - increased profits.
E. If a manufacturer fails to offer such promotion but its competitor offers them,
that competitor will tend to attract consumers away from the manufacturer's
product.
This is such a subtle question. There are TWO parts of the conclusion. The question wants to strengthen just the first part (increased product sales) Not the second (how the manufacturer's profitability is impacted) part.
Which of the following, if true, most strongly supports an argument for the incentive programs? -----> means tick on the answer which strengthens the "incentive program" of the MANUFACTURER. (in favor of the manufacturer)
D is NOT in favor of the manufacturer. It works in favor of the dealers. Dealers cut the profitability. It strengthens the second part of the conclusion.
E says there is a risk by not offering the promotion. E works in favor of the manufacturer - increased sales - increased profits.
E. If a manufacturer fails to offer such promotion but its competitor offers them,
that competitor will tend to attract consumers away from the manufacturer's
product.
nusmavrik
Joined: 26 Nov 2009
Last visit: 03 Apr 2022
Posts: 467
Given Kudos: 36
Status:Impossible is not a fact. It's an opinion. It's a dare. Impossible is nothing.
Affiliations: University of Chicago Booth School of Business
Location: Singapore
Concentration: General Management, Finance
Schools: Chicago Booth - Class of 2015
24 Jul 2010, 19:42
Kudos
Bookmarks
I think you got the wrong OA. Answer should be D.
Conclusion : Such incentive programs often result in a dramatic increase
in the amount of product sold by the automobile manufacturers to dealers but may
hurt the manufacturers' profitability.
A does not explains how manufacturer's profitability is impacted. But it explains dramatic increase in sales.
D supports both the parts of the conclusion. Since the dealers buy most of the sales, the manufacturer's sales goes up during the promotion. Since they sell the items from the warehouse after the promotion - the stock's price now is MRP, they end with huge margins which definitely cut the manufacturer's bottom line. I think this is illegal. But that's besides the point. D is correct.
Conclusion : Such incentive programs often result in a dramatic increase
in the amount of product sold by the automobile manufacturers to dealers but may
hurt the manufacturers' profitability.
A does not explains how manufacturer's profitability is impacted. But it explains dramatic increase in sales.
D supports both the parts of the conclusion. Since the dealers buy most of the sales, the manufacturer's sales goes up during the promotion. Since they sell the items from the warehouse after the promotion - the stock's price now is MRP, they end with huge margins which definitely cut the manufacturer's bottom line. I think this is illegal. But that's besides the point. D is correct.
