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# Extensive research has shown that the effects of short-term

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Director
Joined: 25 Oct 2006
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Extensive research has shown that the effects of short-term  [#permalink]

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06 Apr 2009, 23:55
1
5
Question 1
00:00

Question Stats:

62% (01:23) correct 38% (01:41) wrong based on 505

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Question 2
00:00

Question Stats:

67% (00:32) correct 33% (00:44) wrong based on 482

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Question 3
00:00

Question Stats:

16% (00:45) correct 84% (00:56) wrong based on 501

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Extensive research has shown that the effects of short-term price promotions on sales are themselves Line short-term. Companies’ hopes that promotions might have a positive
aftereffect have not been borne out for reasons that researchers have been able to identify.

A price promotion entices only a brand’s (10) long-term or “loyal” customers; people seldom buy an unfamiliar brand merely because the price is reduced. They simply avoid paying
more than they have to when one of (15) their customary brands is temporarily available at a reduced price. A price promotion does not increase the number of long-term customers
of a brand, as it attracts virtually (20) no new customers in the first place. Nor do price promotions have lingering aftereffects for a brand, even negative ones such as damage to
a brand’s reputation or erosion of (25) customer loyalty, as is often feared.

So why do companies spend so much on price promotions? Clearly price promotions are generally run at a loss, otherwise there would (30) be more of them. And the bigger the increase in sales at promotion prices, the bigger the loss. While short-term price promotions can have legitimate uses, such as (35) reducing excess inventory, it is the recognizable increase in sales that is their main attraction to management, which is therefore reluctant to abandon this strategy despite its effect on the bottom line.
Q3:The primary purpose of the passage is to
* compare the arguments in favor of a certain strategy with those against it
* attack a certain strategy by enumerating its negative consequences
* justify the use of a certain strategy in light of certain criticisms that have been made against it
* advocate a particular strategy by arguing against an alternative
* explain the effects of a certain strategy and the primary motivations for adopting it

Q4:According to the passage, which of the following is the reason why short-term price promotions do not attract new long-term customers to a brand?
* Short-term price promotions do not produce an increase in sales.
* Customers come to regard the promotional price as the fair price and the regular price as excessive.
* Most customers select among competing products largely on the basis of price and very few are loyal to any particular brand.
* Customers who have not previously bought the promoted brand are almost never persuaded to do so by the short-term price promotions.
* Any customers that a brand gains by means of a short-term price promotion are liable to be lost when a competing brand has a similar promotion.

Q5:The passage suggests that evidence for price promotions’ “effect on the bottom line” (Last line ) is provided by
A the lack of lingering aftereffects from price promotions
B the frequency with which price promotions occur
C price promotions’ inability to attract new customers
D price promotions’ recognizable effect on sales
E the legitimate uses to which management can put price promotions

Could you provide explanation on 3rd question?

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Re: RC - Price Promotion causes Demotion  [#permalink]

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16 Apr 2009, 02:55
EBC.

Regarding the third question, the passage explains the effect of price promotion and motive behind it to increase sales. the passage does not advocate any strategy. Hence, D is out. It does not justify the use of any strategy. Hence, C is out. It also does not compare the argument in favor of price promotion with the one against it. Hence, A is out.

Both B and E look correct. However, E has better coverage. Hence, it should be the answer.
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Re: RC - Price Promotion causes Demotion  [#permalink]

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21 May 2009, 19:35
rampuria wrote:
EDB

Rampuria
can u explain the 3rd one as to why it is B
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Re: RC - Price Promotion causes Demotion  [#permalink]

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07 Jun 2009, 06:16
Id like to know why the answer for #3 is B as well. I had it pegged down to D, as the 'bottom line' referred to sales, I thought, and the last sentence does mention that these short term price discounts result in an increase in sales.
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Re: RC - Price Promotion causes Demotion  [#permalink]

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11 Jun 2009, 23:05
I thought it's EDA. But if the OA is B, it could be because of
IMO, "which is therefore reluctant
to abandon this strategy despite
its effect on the bottom line."
This last sentence claims that price promotions are occurring often because of management's attraction but this frequency is hurting the bottom line.
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Re: RC - Price Promotion causes Demotion  [#permalink]

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24 Jun 2009, 13:37
Got E and D for 3 and 4...Can someone please provide the explanation for 5???
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Re: RC - Price Promotion causes Demotion  [#permalink]

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26 Jun 2009, 04:17
IMO E D D. answer to 5th question should be D but not B. i agree with the icandy explanation for 5th question..
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Re: RC - Price Promotion causes Demotion  [#permalink]

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01 Jul 2009, 13:14
I am still confused in case of Q5 (why is the answer B?)
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Re: RC - Price Promotion causes Demotion  [#permalink]

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05 Oct 2010, 09:50
For last question I feel C should be that answer. Bottom line of promotions is to get new customers, however promotions fail to get new customers.
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Re: RC - Price Promotion causes Demotion  [#permalink]

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05 Oct 2010, 10:03
KissGMAT wrote:
For last question I feel C should be that answer. Bottom line of promotions is to get new customers, however promotions fail to get new customers.

" A
price promotion does not increase
the number of long-term customers
of a brand, as it attracts virtually
(20) no new customers in the first place.

Nor do price promotions have linger-
ing aftereffects for a brand, even
negative"
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Re: RC - Price Promotion causes Demotion  [#permalink]

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05 Oct 2010, 20:58
can some one expain why option a is wrong for 5 q
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Re: RC - Price Promotion causes Demotion  [#permalink]

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06 Oct 2010, 12:28
Can anybody explain the subtle line between these two choises? Am I right thinking that C is correct, but D portraites much bigger picture?

The passage suggests that evidence for price promotions’ “effect on the bottom line” (line 40) is provided by
A the lack of lingering aftereffects from price promotions
B the frequency with which price promotions occur
C price promotions’ inability to attract new customers
D price promotions’ recognizable effect on sales
E the legitimate uses to which management can put price promotions

Thanks.
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Re: RC - Price Promotion causes Demotion  [#permalink]

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07 Oct 2010, 13:47
Financier wrote:
Can anybody explain the subtle line between these two choises? Am I right thinking that C is correct, but D portraites much bigger picture?

The passage suggests that evidence for price promotions’ “effect on the bottom line” (line 40) is provided by
A the lack of lingering aftereffects from price promotions
B the frequency with which price promotions occur
C price promotions’ inability to attract new customers
D price promotions’ recognizable effect on sales
E the legitimate uses to which management can put price promotions

Thanks.

yeah i went with C on the last one as well. Please explain. Thanks.
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Re: RC - Price Promotion causes Demotion  [#permalink]

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30 Sep 2012, 03:14
vwjetty wrote:
Financier wrote:
Can anybody explain the subtle line between these two choises? Am I right thinking that C is correct, but D portraites much bigger picture?

The passage suggests that evidence for price promotions’ “effect on the bottom line” (line 40) is provided by
A the lack of lingering aftereffects from price promotions
B the frequency with which price promotions occur
C price promotions’ inability to attract new customers
D price promotions’ recognizable effect on sales
E the legitimate uses to which management can put price promotions

Thanks.

yeah i went with C on the last one as well. Please explain. Thanks.

There is still no explanation for Q5 ? Can anyone please explain the last ques ?
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25 Jan 2016, 20:28
3.The primary purpose of the passage is to
E. explain the effects of a certain strategy and the primary motivations for adopting it.
The first passage introduced short-term price promotions, the second passage discussed the consequences of short-term price promotions and the last passage mentioned why managers used this strategy. Choice E covered all of mentioned-above information.

4. According to the passage, which of the following is the reason why short-term price promotions do not attract new long-term customers to a brand?
B. Customers come to regard the promotional price as the fair price and the regular price as excessive.
D. Customers who have not previously bought the promoted brand are almost never persuaded to do so by the short-term price promotions.
Three others choices are quite easily to be moved. Choice B mentioned the opinion of loyal customer, not new customers.
Choice D is correct since this sentence "people seldom buy an unfamiliar brand merely because the price is reduced."

5. The passage suggests that evidence for price promotions’ “effect on the bottom line” (Last line ) is provided by
B the frequency with which price promotions occur
4 other choices are all mentioned in the passage, so just choice B is not. I think that choice B is correct since it is as a conclusion of 4 remaining choices.
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27 Jan 2016, 07:28
when a passage is easy, the question can still be hard.
this is an example of the case.

ability to answer a question depend on ability to infer from a sentence in a passage. this inference require a full comprehention of a few sentences. this inference is quite difference from reading skill for a main idea and structure of passage

so we need the second skill, inference skill for RC. luckily, this skill is more easy to master than the reading skill.
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31 Jan 2016, 12:33
For question 5, I also marked as C. Below is my reasoning:

Author is in someway criticizing the strategy of short-term pricing providing evidence that "it attracts virtually no new customers in the first place". And in the last paragraph tries to emphasize the point that this strategy is run under loss.

In the last line author provides reason that management is reluctant to stop this because of the "increase in sales" standpoint ignoring the negative effect --> bottom line.

Comparing the options in this line of thought --> C becomes an optimal choice.

Please let me know if my reasoning is flawed.
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Re: Extensive research has shown that the effects of short-term  [#permalink]

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19 Jul 2016, 20:57
ankit0411 wrote:
vwjetty wrote:
Financier wrote:
Can anybody explain the subtle line between these two choises? Am I right thinking that C is correct, but D portraites much bigger picture?

The passage suggests that evidence for price promotions’ “effect on the bottom line” (line 40) is provided by
A the lack of lingering aftereffects from price promotions
B the frequency with which price promotions occur
C price promotions’ inability to attract new customers
D price promotions’ recognizable effect on sales
E the legitimate uses to which management can put price promotions

Thanks.

yeah i went with C on the last one as well. Please explain. Thanks.

There is still no explanation for Q5 ? Can anyone please explain the last ques ?

The first sentence of the last para states the below:

"So why do companies spend so much on price promotions? Clearly price promotions are generally run at a loss, otherwise there would be more of them. "
Clearly, the author says that the price promotions are not worthy to companies. Had they been, there would be more occurrences of price promotions. From this, we can infer that the answer would be 'B'.

We need to understand that this is a inference question. Hence we must be able to prove the answer by materials stated in the passage.

Hope this helps.
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Re: Extensive research has shown that the effects of short-term  [#permalink]

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16 Aug 2016, 02:52
1
The passage suggests that evidence for price promotions’ “effect on the bottom line” (Last line ) is provided by

First off, question is not about what is bottom line.

We have to find out relation between price promotions and effect on the bottom line. / The evidence used for that relationship.

"which is therefore reluctant to abandon this strategy despite its effect on the bottom line." so that means price promotion is negatively affecting bottom line, which is "recognizable increase in sales " now the evidence to prove that is given : "Clearly price promotions are generally run at a loss, otherwise there would be more of them" so the frequency is not that great. relation between price promotions and effect on the bottom line would have been positive there would be more "price promotion" thing.

so B the frequency with which price promotions occur
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Re: Extensive research has shown that the effects of short-term  [#permalink]

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15 Apr 2017, 10:03
My answers are E D D
Time taken : 6 min 15 seconds.
Bottom line = sales .
But why OA for 3 is B not D ??
Re: Extensive research has shown that the effects of short-term &nbs [#permalink] 15 Apr 2017, 10:03

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