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# Consumer's overall perception

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Manager
Joined: 01 Apr 2015
Posts: 116
Concentration: Strategy, Sustainability
GPA: 3.23
WE: Project Management (Energy and Utilities)

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08 Feb 2016, 20:43
2
12
00:00

Difficulty:

25% (medium)

Question Stats:

75% (01:34) correct 25% (01:55) wrong based on 519 sessions

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Consumer's overall perception of the value of a purchase is based not just on assessing the product's inherent value (the acquisition value) but also in part on assessing the value of the "deal", i.e., the transaction value. To assess the transaction value, buyers tend to compare the sales price with another price, the "reference price", that they take to represent the product's real value - another advertised price for the same product or the price of a competing product. The more the reference price exceeds the sale price, the greater the transaction value. When advertising, retailers now routinely provide two prices: a suggested reference price and their actual selling price. Thus, when the selling price is held constant, consumers tend to perceive offers with higher suggested reference prices as presenting a better deal since they suggest greater savings.

Which of the following is an assumption on which the argument depends?

A- Acquisition value does not affect consumers' assessment of transaction value.
B- Advertised reference prices may differ from manufacturers' suggested retail prices.
C- Consumers almost never pay the full advertised reference price for a product.
D- Consumers perceive most suggested reference prices in retailers' advertising to be sufficiently credible as a guide to transaction value.
E- Transaction value is more important than acquisition value in predicting consumer purchasing behavior.
Manager
Joined: 24 Jul 2014
Posts: 94
Location: India
WE: Information Technology (Computer Software)

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13 Feb 2016, 11:12
4
2
Huge chunk with so many information - What I must do ?
Find the conclusion

What is my tool ? Hunt for a conclusion indicator - 'thus' - So ...

What is the conclusion??
Thus, when the selling price is held constant, consumers tend to perceive offers with higher suggested reference prices as presenting a better deal since they suggest greater savings. - this much is our Scope

We must find an answer choice that strengthens this point - consumers while selecting a product are only concerned about the difference of sell price and reference price that they can calculate from the information shared by the retailers.So consumers that the retailers suggestion as their reference pint

only (D) says , retailers given reference price is sufficient for the consumers and they will look no further

Other options are not focused on this point and some of them employ acquisition value which totally out of scope of the conclusion

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##### General Discussion
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Joined: 09 Jan 2016
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19 Feb 2016, 10:40
1
farrous13 wrote:
Consumer's overall perception of the value of a purchase is based not just on assessing the product's inherent value (the acquisition value) but also in part on assessing the value of the "deal", i.e., the transaction value. To assess the transaction value, buyers tend to compare the sales price with another price, the "reference price", that they take to represent the product's real value - another advertised price for the same product or the price of a competing product. The more the reference price exceeds the sale price, the greater the transaction value. When advertising, retailers now routinely provide two prices: a suggested reference price and their actual selling price. Thus, when the selling price is held constant, consumers tend to perceive offers with higher suggested reference prices as presenting a better deal since they suggest greater savings.

Which of the following is an assumption on which the argument depends?

A- Acquisition value does not affect consumers' assessment of transaction value.
B- Advertised reference prices may differ from manufacturers' suggested retail prices.
C- Consumers almost never pay the full advertised reference price for a product.
D- Consumers perceive most suggested reference prices in retailers' advertising to be sufficiently credible as a guide to transaction value.
E- Transaction value is more important than acquisition value in predicting consumer purchasing behavior.

The conclusion - last line - talks about "reference price" and the reference price is set by the retailers.

The assumption is a piece of information that MUST be true in order for the conclusion to be true. Of the five answer choices , B , C , & D mentions reference prices. Reference prices need to be related to consumers. B out.

Between C & D. Also, Reference prices are used to guide transaction value. Only D remains.
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Intern
Joined: 30 Aug 2015
Posts: 31
Concentration: Marketing, Finance
WE: Brand Management (Manufacturing)

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19 Feb 2016, 12:49
2
We must find an answer choice that strengthens this point - consumers while selecting a product are only concerned about the difference of sell price and reference price that they can calculate from the information shared by the retailers.So consumers that the retailers suggestion as their reference pint

only (D) says , retailers given reference price is sufficient for the consumers and they will look no further

Other options are not focused on this point and some of them employ acquisition value which totally out of scope of the conclusion

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Senior Manager
Status: You have to have the darkness for the dawn to come
Joined: 09 Nov 2012
Posts: 314
Daboo: Sonu
GMAT 1: 590 Q49 V20
GMAT 2: 730 Q50 V38

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18 May 2016, 09:42
4
farrous13 wrote:
Consumer's overall perception of the value of a purchase is based not just on assessing the product's inherent value (the acquisition value) but also in part on assessing the value of the "deal", i.e., the transaction value. To assess the transaction value, buyers tend to compare the sales price with another price, the "reference price", that they take to represent the product's real value - another advertised price for the same product or the price of a competing product. The more the reference price exceeds the sale price, the greater the transaction value. When advertising, retailers now routinely provide two prices: a suggested reference price and their actual selling price. Thus, when the selling price is held constant, consumers tend to perceive offers with higher suggested reference prices as presenting a better deal since they suggest greater savings.

Which of the following is an assumption on which the argument depends?

A- Acquisition value does not affect consumers' assessment of transaction value.
B- Advertised reference prices may differ from manufacturers' suggested retail prices.
C- Consumers almost never pay the full advertised reference price for a product.
D- Consumers perceive most suggested reference prices in retailers' advertising to be sufficiently credible as a guide to transaction value.
E- Transaction value is more important than acquisition value in predicting consumer purchasing behavior.

on negating D shatters the conclusion
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SVP
Joined: 12 Dec 2016
Posts: 1854
Location: United States
GMAT 1: 700 Q49 V33
GPA: 3.64

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11 Feb 2018, 15:32
I tried, and it seems that there is no need to read the whole argument to choose D as the correct answer.
For this reason, this question is only at sub lvl 600.

B,C,E are out for sure b/c these options do not sound like an assumption but out of scope.
The first sentence helps to eliminate A => D is the answer.
Re: Consumer's overall perception &nbs [#permalink] 11 Feb 2018, 15:32
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