GMAT Question of the Day - Daily to your Mailbox; hard ones only

It is currently 10 Dec 2018, 05:08


GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

for You

we will pick new questions that match your level based on your Timer History

Your Progress

every week, we’ll send you an estimated GMAT score based on your performance


we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.


Request Expert Reply

Confirm Cancel
Events & Promotions in December
Open Detailed Calendar
  • Free lesson on number properties

     December 10, 2018

     December 10, 2018

     10:00 PM PST

     11:00 PM PST

    Practice the one most important Quant section - Integer properties, and rapidly improve your skills.
  • Free GMAT Prep Hour

     December 11, 2018

     December 11, 2018

     09:00 PM EST

     10:00 PM EST

    Strategies and techniques for approaching featured GMAT topics. December 11 at 9 PM EST.

Can the pros please help me grade my essay?

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
Joined: 19 Jun 2018
Posts: 2
CAT Tests
Can the pros please help me grade my essay?  [#permalink]

Show Tags

New post 05 Aug 2018, 15:33

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 you find this argument. Point out flaws in the argument's logic and analyze the argument's underlying assumptions. In addition, evaluate how supporting evidence is used and what evidence might counter the argument's conclusion. You may also discuss what additional evidence could be used to strengthen the argument or what changes would make the argument more logically sound.

My Response:
The beverage manufacturer argues that, in order to 1) improve company's profitability and 2) enhance consumer perception, the firm should lower prices on all the drinks it produces, because this tactic has been deemed a success in raising unit sales and consumer perception for its line of energy drinks. The flaw in this argument is two fold: 1) the success in raising unit sales does not necessarily mean an increase in profitability, and 2) improvement in customer perception on energy drinks does not necessarily carry over to other drink products.

One of the key objectives of the the beverage firm is to improve profitability, however, we don't know for sure that was the outcome from the price reduction promotion on energy drinks. We know that unit sales have gone up significantly, but profitability depends on both the unit and the margins on each unit. The price could have possibly been reduced so much that the profitability actually decreased. Even if we assume that the price promotion did, in fact, make the energy drink franchise more profitably, the effect might not be transferable to other drink products, with markets that might be very different, especially if the margins on the other products are already very low. Therefore, we cannot say for sure this tactic helps profitability across all drink franchises.

The other object of the firm was to enhance customer perception, however, this also presents some flaws in logic. Since we can't assume all drinks to equal energy drinks, we can't know for sure that the customers will react the same way to a price reduction. Majority of the customers surveyed were energy drink users, and this population could have very little overlap with the customers of all other drink products. Therefore, the perception improvement might not carry across to other drink products. On the contrary, the tactic might backfire if other drinks are luxury products that have well-established brands and reputation. Customers might see a price reduction as a decrease in quality and therefore perceive the product negatively. This object also cannot be accomplished by a price reduction.

For the two reasons above, the beverage manufacturer is not guaranteed to have the desired results of increased profitability and enhanced perception if they decide to deploy the price reduction tactic across all drink products that they manufacture.
Joined: 23 Nov 2017
Posts: 107
Location: Singapore
Concentration: Strategy, Other
GMAT 1: 660 Q49 V33
Re: Can the pros please help me grade my essay?  [#permalink]

Show Tags

New post 05 Aug 2018, 17:30
the above is a good attempt, however, you may want to insert key words and increase the length of your write up.
GMAT Club Bot
Re: Can the pros please help me grade my essay? &nbs [#permalink] 05 Aug 2018, 17:30
Display posts from previous: Sort by

Can the pros please help me grade my essay?

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  


GMAT Club MBA Forum Home| About| Terms and Conditions and Privacy Policy| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.