Companies that sell soap, perfume, candy bars, and other consumer

Question

Companies that sell soap, perfume, candy bars, and other consumer products are expert at “decommoditizing” them: finding and capturing the value of intangible benefits and building strong brand identification. But companies that sell unspecialized products such as bulk chemicals, paper, and steel to businesses tend to be unsophisticated in these matters. Many of these companies strive to churn out more product more cheaply and then to sell as much as possible at the market price. Viewing themselves as commodity producers, they are likely to overlook the  nonfunctional features  of their products—delivery speeds, after-sales service, etc.

As a result, such companies leave large amounts of money on the table. They would be far better off if they looked to marketing-oriented businesses and embraced the notion that buyers care not only about a product’s price but also about the way it is sold to them, the services that accompany it, and their relationship with the seller. If these manufacturers were to take that approach, they would find themselves thinking about their customer base not as they have traditionally segmented it—large and small, based in France or Germany, and so forth—but as composed of businesses that want (and are willing to pay for) quite different things. This would in turn help manufacturers focus on the segments whose business they can win and retain most profitably.   1 
1. Which of the following most nearly approximates the meaning of the phrase “nonfunctional features” (see highlighted text) in the passage?

A.  Aspects of the product sold that are not inherent in the type of commodity in question
B.  Characteristics that matter little if at all to most buyers of the product
C.  Product upgrades that the buyer may choose to purchase at an additional charge
D.  Components of the product that are not considered by manufacturers to be important
E.  Any of the characteristics of a product that are highlighted in advertising for the product

2 
2. According to the passage, companies that sell bulk chemicals, paper, and steel tend to fail to view their customer base as being segmented in which of the following ways?

A.  According to the size of the businesses in each segment
B.  According to the buying power of the businesses in each segment
C.  According to the common wants of the businesses in each segment
D.  According to the length of their relationship with the businesses in each segment
E.  According to the regional characteristics of the businesses in each segment

3 
3. Which of the following describes a strategy that, if implemented by a company that sells unspecialized bulk products, would be the most fitting example of the author’s recommendations in the passage?

A. Participating in an industry-wide publicity campaign designed to make consumers more aware of the product that it and similar companies sell
B. Interviewing buyers of its product to determine exactly which features customers would be willing to pay more to receive
C. Raising the price of its product in small, semiannual increments while initiating a marketing campaign designed to justify these price increases by highlighting increased research and development costs
D. Cutting back on after-sales services that are not directly related to maximizing the performance of its product
E. Initiating research to determine what strategies other companies that sell the same product are using in attempts to reduce their marketing costs

samdoesthegmat · Answer

Question 2:

I chose option D. I originally was thinking "according to the common wants of the businesses in each segment" but then I saw "they would find themselves thinking about their customer base not as they have traditionally segmented it...but as composed of businesses that want (and are willing to pay for) quite different things." I assumed that that answer choice was a trick because it explicitly lists common wants of the business (which could be interpreted as the plain commodities they're selling). In terms of justifying my answer choice, the passage states "they would be far better off if they... embraced the notion that buyers care not only about... and their relationship with the seller." So I figured the length mattered, even though it wasn't 100% fitting, it still fit better than the "Correct" answer choice that lists the opposite of what the passage directly states.

Wondering if you have insights as to how I interpreted this question - thanks!

Wondering if you have insights as to how I interpreted this question - thanks!

sachi-in · Answer

samdoesthegmat 
What is the official answer ? It should be C

The theme / summary is present in these few lines :

If these manufacturers were to take that approach, they would find themselves thinking about their customer base not as they have traditionally segmented it—large and small, based in France or Germany, and so forth—but  as composed of businesses that want (and are willing to pay for) quite different things.

There is no decommodization / they segment these goods as commodities ( sell by tons / kgs cheap prices etc. ) . They should think more about how the customer wants these goos not in terms of goods but in terms of services too. This will help them retain consumers and bring in long term profits.

chetan2u · Answer

Companies that sell soap, perfume, candy bars, and other consumer products are expert at “decommoditizing” them: finding and capturing the value of intangible benefits as well as building strong brand identification. But companies that sell unspecialized products such as bulk chemicals, paper, and steel to businesses tend to be unsophisticated in these matters. Many of these companies strive to churn out more product more cheaply and then to sell as much as possible at the market price. Viewing themselves as commodity producers, they are inclined to overlook the nonfunctional features of their products—delivery speeds,  after-sales service , etc.

As a result, such companies leave large amounts of money on the table. They would be far better off if they looked to marketing-oriented businesses and embraced the notion that buyers care not only about a product’s price but also about the way it is sold to them, the services that accompany it, and  the relationship with the seller . If these manufacturers were to take that approach, they would find themselves thinking about their customer base not as they have traditionally segmented it— large and small, based in France or Germany, and so forth — but as composed of businesses that want (and are willing to pay for) quite different things . This would in turn help manufacturers focus on the segments whose business they can win and retain most profitably.
 1. According to the passage, companies that sell bulk chemicals, paper, and steel tend to fail to view their customer base as being segmented in which of the following ways?

Let us check the options

A. According to the size of the businesses in each segment
This is the way it was traditionally segmented.  Blue portion

B. According to the buying power of the businesses in each segment
There is no mention of buying power.

C. According to the common wants of the businesses in each segment
The  bold portion  in the para speaks of the different things the businesses want. So, the segment should be done as per their common wants. 
Correct

D. According to the length of their relationship with the businesses in each segment
The  red  portion may tempt one towards this answer. But these portions just talk of services and relations that buyer wants with the seller. It no where suggests that the segments have to be divided as per the length of relationship, for example those working together for 10 years different from those working for 20 years. Also, the portion of para speaking about these segments is only after the blue portion.

E. According to the regional characteristics of the businesses in each segment
Again, traditional segments,  blue  portion.

C

sachi-in · Answer

1. According to the passage, companies that sell bulk chemicals, paper, and steel tend to fail to view their customer base as being segmented in which of the following ways?

A)  According to the size of the businesses in each segment - Correct
 B)  According to the buying power of the businesses in each segment
 C)  According to the common wants of the businesses in each segment
 D)  According to the length of their relationship with the businesses in each segment
 E)  According to the regional characteristics of the businesses in each segment

Line highlighted in blue summary  : manufactures instead of segmenting as Big/Small or France/Germany, should concentrate on businesses that want (and are willing to pay for) quite different things i.e see the common requirements in each category

2. Which of the following describes a strategy that, if implemented by a company that sells unspecialized bulk products, would be the most fitting example of the author’s recommendations in the passage?

A)  Participating in an industry-wide publicity campaign designed to make consumers more aware of the product that it and similar companies sell
B)  Interviewing buyers of its product to determine exactly which features customers would be willing to pay more to receive - Correct
C)  Raising the price of its product in small, semiannual increments while initiating a marketing campaign designed to justify these price increases by highlighting increased research and development costs
D)  Cutting back on after-sales services that are not directly related to maximizing the performance of its product
E)  Initiating research to determine what strategies other companies that sell the same product are using in attempts to reduce their marketing costs

Author talks about: manufactures should find out what the consumers need ( this is indicated only in option B )

3. Which of the following most nearly approximates the meaning of the phrase “nonfunctional features” (see   highlighted   text) in the passage?

A)  Aspects of the product sold that are not inherent in the type of commodity in question  -   Correct  ( hold onto and check next options )
 B)  Characteristics that matter little if at all to most buyers of the product - Incorrect ( they overlook but this is not called nonfunctional becuase of that, they overlook the nonfunctional features )
 C)  Product upgrades that the buyer may choose to purchase at an additional charge - Incorrect no indication in passage
 D)  Components of the product that are not considered by manufacturers to be important - Incorrect ( they overlook but this is not called nonfunctional becuase of that, they overlook the nonfunctional features )
 E)  Any of the characteristics of a product that are highlighted in advertising for the product - Incorrect no indication in passage

GMATNinja · Answer

There's nothing in the passage about segmenting based on length, so (D) has to go.

As stated in previous replies, the author suggests that companies that sell unspecialized products SHOULD think about their customer base as composed of businesses that want quite different things. In other words, they SHOULD think about their customer base as being segmented based on what the customers want (e.g. Segment A wants super fast delivery speeds, Segment B wants really good after-sales service, etc.).

In that case, a segment would consist of businesses that have certain "wants" in common -- and since the companies aren't currently segmenting that way, (C) is spot on.

I hope that helps!

Dbrunik · Answer

3 for 3 under 6 minutes. lets go!

Elite097 · Answer

Question 1

The passage contrasts "nonfunctional features" with the functional aspects of a product, such as its price or inherent characteristics. The "nonfunctional features" mentioned—delivery speeds, after-sales service, and customer relationships—are aspects of the product experience that are not directly tied to the physical or intrinsic qualities of the commodity itself but add value for the buyer.

Why the other options are incorrect:
B): The passage emphasizes that buyers do care about nonfunctional features like service and delivery speed, so this is not accurate.

C): The passage does not suggest that "nonfunctional features" are optional upgrades sold at an additional charge. It simply states they are part of the product offering.

D): While manufacturers may overlook these features, the passage does not define "nonfunctional features" as components considered unimportant by manufacturers.

E): Advertising may highlight nonfunctional features, but the passage does not equate "nonfunctional features" with characteristics highlighted in advertising.

Elite097 · Answer

Question 3

The passage recommends that companies selling unspecialized bulk products focus on identifying and delivering the nonfunctional features that customers value, such as delivery speeds, after-sales service, and customer relationships. The author suggests that these companies should think beyond just producing and selling at the lowest price and instead tailor their offerings to meet specific customer needs.

B) describes a strategy where the company directly gathers information about what customers value most and would be willing to pay extra for, which aligns perfectly with the author's recommendation to focus on understanding and segmenting the customer base.
Why the other options are incorrect:
A): Participating in an industry-wide campaign might raise awareness but does not address tailoring the company's offerings to specific customer needs or adding value through nonfunctional features.

C): Raising prices and justifying them through a marketing campaign does not focus on understanding or delivering the nonfunctional features customers care about.

D): Cutting back on after-sales services contradicts the author's advice to enhance nonfunctional features, such as service and customer relationships.

E): Researching competitors' strategies to reduce marketing costs does not address the core recommendation of tailoring offerings to customer needs and focusing on nonfunctional features.

Companies that sell soap, perfume, candy bars, and other consumer

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GMAT Reading Comprehension (RC) Questions

Companies that sell soap, perfume, candy bars, and other consumer

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

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My Rewards