Densmore Company, known for its luxury goods, has recently

option e states How the sale price compare to those for comparable, non-discounted products
It's a nice explanation , but it doesnt explain the fact that how buggati's discounted model is comparable to peugeot?
While making a buying decison by customers stated in option E the models here or the products in the argument must be comparable.

Densmore Company, known for its luxury goods, has recently expanded its business and has begun marketing to consumers who, when surveyed, have stated that they usually purchase products priced at or below the prevailing market rate. To attract these customers' business, Densmore is advertising that its new, more inexpensive product lines, already priced lower than its top-selling luxury items, are on sale for 30% off. The Densmore marketing staff has determined that advertising its discounted prices is the most effective way of attracting potential customers.

Which of the following would be most helpful in evaluating the likelihood that Densmore's plan will achieve its goal?

A) How the profit margins on the new product lines compare to those for the top selling luxury items. -We need to compare inexpensive products with each other. Incorrect comparison

B) What percentage of existing Densmore customers are included in the consumer survey. -Doesn't matter. A potential customer is a potential customer, new or old doesn't matter as long as the sales improve.

C) How many consumers surveyed are existing Densmore customers. -Same as B

D) Whether those consumers most concerned with bargain-hunting will be exposed to Densmore's advertising campaign. -People looking for bargaining will never be satisfied with the prices. Out of scope

E) How the sale price compare to those for comparable, non-discounted products. -Correct. The argument reasons that if the prices of new products will be lower than market prices then there is a chance of better sales. This option targets this very crux of the argument.

A) How the profit margins on the new product lines compare to those for the top selling luxury items. - The goal is to attract customers. Profit margins are irrelevant.

B) What percentage of existing Densmore customers are included in the consumer survey. - The argument states "Densmore Company, known for its luxury goods, has recently expanded its business and has begun marketing to consumers who, when surveyed, have stated that they usually purchase products priced at orbelow the prevailing market rate.", implying that it is targeting a different segment of customers now (who usually wont purchase above the prevailing market rates). Irrelevant.

C) How many consumers surveyed are existing Densmore customers. - Same as B.

D) Whether those consumers most concerned with bargain-hunting will be exposed to Densmore's advertising campaign. - The argument states "has begun marketing to consumers who, when surveyed, have stated that they usually purchase products priced at or below the prevailing market rate". Goes against argument.

E) How the sale price compare to those for comparable, non-discounted products. - Correct

Dear VeritasKarishma AnthonyRitz AjiteshArun IanStewart GMATGuruNY,

Since there is not many explanations found on the internet. Let me ask a couple of questions here:

Q1. What is the goal of the plan?

The Densmore marketing staff has determined that advertising its discounted prices is the most effective way of attracting potential customers.

Is it to attract NEW customers? Or just any customers (doesn't matter NEW or EXISTING customers)?

I thought the goal is to attract new customers, so I land on choice B.

Q2. Why is choice D. wrong?

If the customers are not exposed to the advertisement, the plan will easily become ineffective! The target group does not even know that the products exist! (not to mention considering buying them)

Please help!

DC (a luxury brand) wants to expand and market to consumers who usually purchase products priced at or below the prevailing market rate.
Plan: Attract them by advertising 30% off on their inexpensive line
DC has determined that advertising is the most effective way for them (best reach)
Goal of the plan: Attract consumers who usually purchase products priced at or below market rate

Evaluate the likelihood that the plan will achieve its goal.

A) How the profit margins on the new product lines compare to those for the top selling luxury items.

Profit margins have nothing to do with our goal.

B) What percentage of existing Densmore customers are included in the consumer survey.

Irrelevant. We are not concerned with current customers, neither with all consumers surveyed. We are only concerned with those surveyed consumers who said that they purchase products priced at or below market rate. The current consumers would be luxury good consumers. The advertising is targeting the people who buy at or below market price. The overlap would be little.

C) How many consumers surveyed are existing Densmore customers.

As discussed above, irrelevant.

D) Whether those consumers most concerned with bargain-hunting will be exposed to Densmore's advertising campaign.

We don't know who "consumers most concerned with bargain-hunting" are. It may not be the same as the "consumers who buy at or below market price". Our target consumers may not be MOST CONCERNED with bargain hunting. Besides, we have already found that advertising is the most effective way. How effective it is, is irrelevant.

E) How the sale price compare to those for comparable, non-discounted products.

Our target consumers buy at or below market price. We need to see if DC products after 30% are at or below market price. If other products on the market are still lower priced, we may not get the consumers we want. Hence, we need this info.

Answer (E)

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