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Extensive research has shown that the effects of short-term price prom

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Extensive research has shown that the effects of short-term price prom  [#permalink]

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New post Updated on: 01 Mar 2019, 00:54
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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 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 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 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 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 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 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.
Q1:The primary purpose of the passage is to
A. compare the arguments in favor of a certain strategy with those against it
B. attack a certain strategy by enumerating its negative consequences
C. justify the use of a certain strategy in light of certain criticisms that have been made against it
D. advocate a particular strategy by arguing against an alternative
E. explain the effects of a certain strategy and the primary motivations for adopting it



Q2: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?
A. Short-term price promotions do not produce an increase in sales.
B. Customers come to regard the promotional price as the fair price and the regular price as excessive.
C. Most customers select among competing products largely on the basis of price and very few are loyal to any particular brand.
D. Customers who have not previously bought the promoted brand are almost never persuaded to do so by the short-term price promotions.
E. 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.



Q3: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



Q4.It can be inferred from the passage that if a company ceasded to run short-term price promotions for a particular product, an effect of this change wuld be
A. reduce excess inventory of the product
B. lose some of the product's long term customers
C. reduce the product's overall sales
D. inhibit growth in the number of product's customer.
E. threaten the products profitability.



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Originally posted by priyankur_saha@ml.com on 06 Apr 2009, 23:55.
Last edited by Bunuel on 01 Mar 2019, 00:54, edited 2 times in total.
Renamed the topic and edited the question.
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Re: Extensive research has shown that the effects of short-term price prom  [#permalink]

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New post 13 Feb 2013, 02:47
6
The effects on the bottom line are that losses are brought due to these promotions. So what does the passage state to provide support to the fact that these promotions do infact bring losses? "Clearly price promotions are generally run at a loss, otherwise there would be more of them". This sentence almost explicitly provides the reason. The right answer is hence B.
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Re: Extensive research has shown that the effects of short-term price prom  [#permalink]

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New post 07 Aug 2009, 13:34
1
Its A
Quote:
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.


Now it says P.P doesn't increase long term customers, doesn't mean P.P doesn't increase customer base at all.
Hence C can be rejected
I Select A for the highlighted portion
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Re: Extensive research has shown that the effects of short-term price prom  [#permalink]

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New post 17 Aug 2009, 13:22
1
1
B

The question ask for proof that promotions hurt the bottom line.

ankur55 wrote:
...Clearly
price promotions are generally run
at a loss, otherwise there would
(30) be more of them...


There is your evidence that promotions hurt the bottom line.
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Re: Extensive research has shown that the effects of short-term price prom  [#permalink]

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New post 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: Extensive research has shown that the effects of short-term price prom  [#permalink]

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New post 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: Extensive research has shown that the effects of short-term price prom  [#permalink]

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New post 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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New post 29 Dec 2014, 22:17
Q13: The passage suggests that evidence for price promotions’ “effect on the bottom 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

Para#2 discuses this:
While short-term price promotions can have legitimate uses, such as 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.

The question itself is not clear to me.Anyways for me,its C. I appreciate inputs from fraternity on this.
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New post 19 Jul 2016, 20:57
1
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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New post 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 price prom  [#permalink]

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New post 03 Jul 2017, 13:55
1)Price Promotion -> bad for loyalty, Bad for bottom line.
Why companies do this ? – Some benefits (explanation)
Consider Option E : explain the effects of a certain strategy (this is true, the author discussed this in the first para) and the primary motivations for adopting it (this is also true, the author explains this in the end of the passage – clearance, and reluctance to to abandon in hopes of profit margins later on)
Option E therefore is correct!
Consider Option C: justify the use of a certain strategy(does he justify the use of price promotion?) in light of certain criticisms that have been made against it.
Understand that the tone of the author overall is more or less negative wrt price promotions. The word “justify” implies that the author argues in support for this strategy. This is NOT true! C is therefore wrong.
2)""people seldom buy an unfamiliar brand merely because the price is reduced."
3)What does the passage state to provide support to the fact that these promotions incur losses? It is the sentence that says, “Clearly price promotions are generally run at a loss, otherwise there would be more of them”. Hence B.
4)"While short-term price promotions can have legitimate uses, such as 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.". Main reason to go for short term is because it helps in boosting sales. So, if you cease it obviously sales will go down.Hence C
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New post 04 Oct 2018, 11:26
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.


The passage suggests that evidence for price promotions’ “effect on the bottom line” (the effect being that they have the companies incur losses – lines 19 – 20) is provided by
A. the lack of lingering aftereffects from price promotions … this being a location based question … lingering aftereffects is something that is a part of para 1 … as per the passage lack of lingering can best explain the fact that the strategy does not have its intended effect … however, it cannot explain the losses incurred
B. the frequency with which price promotions occur …passage confirms that the lesser frequency implies the strategy has the company incurring losses … and the word ‘despite’ just before the phrase ‘effect on the bottom line’ allows one to glean from the context that the phrase refers to the negative effect mentioned earlier in the paragraph which is ‘running at a loss’ … thus CORRECT
C. price promotions’ inability to attract new customers … part of para 1 again … the concerned piece is a part of para 2 … again as per the passage this inability only proves that the strategy did not have it intended effects … not why the company instituting the strategy suffered loss
D. price promotions’ recognizable effect on sales … recognizable effects is something that might be inferred as working in the positive direction for the companies employing the strategy, however, the ‘effect on the bottom line’ is something that works in the negative direction for the company … one cannot thus be the evidence of the other
E. the legitimate uses to which management can put price promotions … again the legitimate uses are something that go in the benefitting direction whereas the ‘effect on the bottom line’ goes in the opposite direction … there is no way that one can be the evidence of the other
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Re: Extensive research has shown that the effects of short-term price prom  [#permalink]

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New post 15 Nov 2018, 08:00
I am not able to understand the Q2?

Can some one explain me, please?

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New post 16 Jan 2019, 07:26
rinkumaa4 wrote:
I am not able to understand the Q2?

Can some one explain me, please?

regards



This is the reason
A
price promotion entices only a brand’s 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 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 no new customers in the first place.


I am new here.
Can you pls tell me what level passage this is
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Re: Extensive research has shown that the effects of short-term price prom   [#permalink] 16 Jan 2019, 07:26
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