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# Experia Inc., a pioneer in online retailing in the cosmetics business

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Manager
Joined: 10 Apr 2018
Posts: 182
Experia Inc., a pioneer in online retailing in the cosmetics business  [#permalink]

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11 Oct 2018, 20:22
1
00:00

Difficulty:

45% (medium)

Question Stats:

63% (01:27) correct 37% (01:40) wrong based on 100 sessions

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Experia Inc., a pioneer in online retailing in the cosmetics business, does not have a physical presence and sells all its products through its website. While evaluating its various marketing channels, the company discovered that it attracts two times as many visitors for every dollar spent on advertising on Google than on Cosmetico, an online beauty magazine. The company has, therefore, decided to shift some of its marketing funds from the magazine to Google to increase its overall profits.

Which of the following most strongly supports the ability of the company’s plan to increase its profits?

(A)Customers originating from Google are twice as likely to write free online reviews for the company’s products as are customers originating from Cosmetico.

(B)There is a significant difference between the visitors to customer conversion ratios for the two channels.

(C)Currently, Google and Cosmetico are not the only two channels through which the company acquires customers.

(D)Currently, very few other cosmetic companies advertise in Cosmetico.

(E)Customer satisfaction, a factor leading to repeat business, is considerably higher for customers originating from Google than for customers through any other channel.
Manager
Joined: 31 May 2015
Posts: 104
Re: Experia Inc., a pioneer in online retailing in the cosmetics business  [#permalink]

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12 Oct 2018, 01:41
1
Is A wrong because the reviews originated from google could be bad reviews?
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Re: Experia Inc., a pioneer in online retailing in the cosmetics business  [#permalink]

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12 Oct 2018, 16:50
sony1000 -- Think about the exact reason for the plan. The plan exists to increase revenue. Because of that, there needs to be some link between what's happening in the answer choice and revenue. (A) ends up being wrong not because the reviews could be bad but because no direct link is established between reviews and increasing profits.

Compare that with the correct answer, (E). It references "A factor leading to repeat business" as part of its answer -- they make the link between customer satisfaction from google being higher and what that means for the company's profits, which is why it works.
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Re: Experia Inc., a pioneer in online retailing in the cosmetics business  [#permalink]

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13 Oct 2018, 00:59
1
Probus wrote:
Experia Inc., a pioneer in online retailing in the cosmetics business, does not have a physical presence and sells all its products through its website. While evaluating its various marketing channels, the company discovered that it attracts two times as many visitors for every dollar spent on advertising on Google than on Cosmetico, an online beauty magazine. The company has, therefore, decided to shift some of its marketing funds from the magazine to Google to increase its overall profits.

Which of the following most strongly supports the ability of the company’s plan to increase its profits?

(A)Customers originating from Google are twice as likely to write free online reviews for the company’s products as are customers originating from Cosmetico.

(B)There is a significant difference between the visitors to customer conversion ratios for the two channels.

(C)Currently, Google and Cosmetico are not the only two channels through which the company acquires customers.

(D)Currently, very few other cosmetic companies advertise in Cosmetico.

(E)Customer satisfaction, a factor leading to repeat business, is considerably higher for customers originating from Google than for customers through any other channel.

The company attracts two times as many visitors from Google than on Cosmetico (for every dollar spent).
The company has, therefore, decided to shift some of its marketing funds from the magazine to Google to increase its overall profits.

Plan is to shift funds to Google to increase profits.

We need to support the plan - increasing profits by shifting funds to Google.

(A)Customers originating from Google are twice as likely to write free online reviews for the company’s products as are customers originating from Cosmetico.
We don't know whether free online reviews help increase the bottom line or not. So whether this is a plus in Google's favour, we don't know.

(B)There is a significant difference between the visitors to customer conversion ratios for the two channels.
This is not a plus for either because we don't know for which channel the conversion ratio is higher. If Google's conversion ratio is also higher (in addition to twice the number of visitors) then it is a win-win for Google. If Cosmetico's conversion ratio is much higher, then Google might lose its advantage.
But this option doesn't give us a clear picture.

(C)Currently, Google and Cosmetico are not the only two channels through which the company acquires customers.
Other channels are irrelevant. The argument is Google vs Cosmetico.

(D)Currently, very few other cosmetic companies advertise in Cosmetico.
Again, we don't know whether it is in favour of Cosmetico or against it.

(E)Customer satisfaction, a factor leading to repeat business, is considerably higher for customers originating from Google than for customers through any other channel.
This is an advantage that Google has. If customer satisfaction is higher and that implies better repeat business, Google customers will bring in repeat revenue. So the plan to shift to Google seems even better now.

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Karishma
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Re: Experia Inc., a pioneer in online retailing in the cosmetics business   [#permalink] 13 Oct 2018, 00:59
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# Experia Inc., a pioneer in online retailing in the cosmetics business

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