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# GMAT v2f Autmobile manufacturers often offer incentive

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Intern
Joined: 25 May 2008
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GMAT v2f Autmobile manufacturers often offer incentive [#permalink]

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01 Jan 2009, 11:17
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GMAT v2f

Autmobile manufacturers often offer incentive programs through which they discount the price of a car to their dealers for a promotion period when the product is advertised to consumers. Such incentive programs often result in a dramatic increase in the amount of product sold by the automobile manufacturers to dealers but may hurt the manufacturers's profitability.

Which of the following, if true, most strongly supports an argument for the incentive programs?

a. the amount of discount generally offered by manufacturers to dealers is carefully calculated to represent the minimum needed to draw consumers' attention to the product.
b. For many consumer products, the period of advertising discounted prices to consumers is about a week, which is not sufficiently long for consumers to become used to the sale price.
c. More prestigious auto makers do not use incentive programs because they dilute the company's brand name.
d. During such a promotion, retailers tend to accumulate in their warehouses inventory bought at discount; they then sell much of it later at their regular price.
e. If a manufacturer fails to offer such promotion but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product.

Question... why not D?

hbs2012,
Gmat club forum etiquette is not to release the OA with the question but to realese the same after a day or two after posting the question. Posting OA with the question doesnot provide challange and incentive to the responders and posters as well. Its a win-win game. So please be refrain from doing so.

Refer here: http://gmatclub.com/forum/posting.php?m ... 1&p=428883

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Joined: 29 Aug 2007
Posts: 2426
Re: CR: automobile manufacturures and incentives [#permalink]

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01 Jan 2009, 11:45
hbs2012 wrote:
Autmobile manufacturers often offer incentive programs through which they discount the price of a car to their dealers for a promotion period when the product is advertised to consumers. Such incentive programs often result in a dramatic increase in the amount of product sold by the automobile manufacturers to dealers but may hurt the manufacturers's profitability.

Which of the following, if true, most strongly supports an argument for the incentive programs?

a. the amount of discount generally offered by manufacturers to dealers is carefully calculated to represent the minimum needed to draw consumers' attention to the product.
b. For many consumer products, the period of advertising discounted prices to consumers is about a week, which is not sufficiently long for consumers to become used to the sale price.
c. More prestigious auto makers do not use incentive programs because they dilute the company's brand name.
d. During such a promotion, retailers tend to accumulate in their warehouses inventory bought at discount; they then sell much of it later at their regular price.
e. If a manufacturer fails to offer such promotion but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product.

Question... why not D?

Make sure you have correct OA.
I also think it should be D too cuz if retailers, during such a promotion, accumulate cars at discount (or at lower or no margin) and sell them at later, manufacturers's slaes of cars at high margin after such promotions reduced, resulting in lower margin sales that obviously lowers the profitability.

E doesnot strengthen the argument.
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Joined: 12 Oct 2008
Posts: 99
Re: CR: automobile manufacturures and incentives [#permalink]

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01 Jan 2009, 12:17
I think it is E, because we are asked to pick the statement which most strongly supports the incentive programs not the argument. While incentive programs may hurt the manufacturers's profitability, manufacturer who fails to offer such promotion but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product
SVP
Joined: 29 Aug 2007
Posts: 2426
Re: CR: automobile manufacturures and incentives [#permalink]

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01 Jan 2009, 13:19
GMAT TIGER wrote:
hbs2012 wrote:
Autmobile manufacturers often offer incentive programs through which they discount the price of a car to their dealers for a promotion period when the product is advertised to consumers. Such incentive programs often result in a dramatic increase in the amount of product sold by the automobile manufacturers to dealers but may hurt the manufacturers's profitability.

Which of the following, if true, most strongly supports an argument for the incentive programs?

a. the amount of discount generally offered by manufacturers to dealers is carefully calculated to represent the minimum needed to draw consumers' attention to the product.
b. For many consumer products, the period of advertising discounted prices to consumers is about a week, which is not sufficiently long for consumers to become used to the sale price.
c. More prestigious auto makers do not use incentive programs because they dilute the company's brand name.
d. During such a promotion, retailers tend to accumulate in their warehouses inventory bought at discount; they then sell much of it later at their regular price.
e. If a manufacturer fails to offer such promotion but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product.

Question... why not D?

Make sure you have correct OA.
I also think it should be D too cuz if retailers, during such a promotion, accumulate cars at discount (or at lower or no margin) and sell them at later, manufacturers's slaes of cars at high margin after such promotions reduced, resulting in lower margin sales that obviously lowers the profitability.

E doesnot strengthen the argument.

Agree with E now as I also over-looked the question: Which of the following, if true, most strongly supports an argument for the incentive programs?

E is a reason behind mfgs' incentive programs through which mfgs discount the price of a car to their dealers for a promotion period when the product is advertised to consumers.

Thanks linau1982.
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VP
Joined: 05 Jul 2008
Posts: 1333
Re: CR: automobile manufacturures and incentives [#permalink]

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01 Jan 2009, 20:10
linau1982 wrote:
I think it is E, because we are asked to pick the statement which most strongly supports the incentive programs not the argument. While incentive programs may hurt the manufacturers's profitability, manufacturer who fails to offer such promotion but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product

Agree. E is correct. D actually does not offer support
Senior Manager
Joined: 08 Nov 2008
Posts: 261
Re: CR: automobile manufacturures and incentives [#permalink]

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02 Jan 2009, 08:03
at first I hv opted for D ...but once I hv revisted question ...E comes as a clear winner ..
Lesson learned - It happen quite often that we are in hurry to maintain required run rate ( read desired speed ) , we tend to mis comprehend the question ...this leads to silly mistake ...at least for me this is the improement area ...I am sure I will improve my accuracy at least by 20% .
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Posts: 89
Re: CR: automobile manufacturures and incentives [#permalink]

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04 Jan 2009, 00:01
The conclusion of the argument is : "Such incentive programs often result in a dramatic increase in the amount of product sold by the automobile manufacturers to dealers but may hurt the manufacturers's profitability."

Option (E) may support and explain the long term profitability aspect but it doesn't support the reason for rapid rise in product sales.

(D) is the answer. If this is not OA, then OA is WRONG.
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Intern
Joined: 04 Jan 2009
Posts: 2
Re: CR: automobile manufacturures and incentives [#permalink]

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05 Jan 2009, 00:03
hbs2012 wrote:
GMAT v2f

Autmobile manufacturers often offer incentive programs through which they discount the price of a car to their dealers for a promotion period when the product is advertised to consumers. Such incentive programs often result in a dramatic increase in the amount of product sold by the automobile manufacturers to dealers but may hurt the manufacturers's profitability.

Which of the following, if true, most strongly supports an argument for the incentive programs?

a. the amount of discount generally offered by manufacturers to dealers is carefully calculated to represent the minimum needed to draw consumers' attention to the product.
b. For many consumer products, the period of advertising discounted prices to consumers is about a week, which is not sufficiently long for consumers to become used to the sale price.
c. More prestigious auto makers do not use incentive programs because they dilute the company's brand name.
d. During such a promotion, retailers tend to accumulate in their warehouses inventory bought at discount; they then sell much of it later at their regular price.
e. If a manufacturer fails to offer such promotion but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product.

hbs2012,

The question is "strongly supports .. the incentive program", i.e. why would the manufacturer knowing the conclusion go for the discount price. One apparent reason is the conclusion is partly in-correct, reduction in price defi increases the sales, however it doesn't affect profitability because (A)

Intern
Joined: 04 Jan 2009
Posts: 2
Re: CR: automobile manufacturures and incentives [#permalink]

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05 Jan 2009, 00:11
GMAT TIGER wrote:
hbs2012 wrote:
Autmobile manufacturers often offer incentive programs through which they discount the price of a car to their dealers for a promotion period when the product is advertised to consumers. Such incentive programs often result in a dramatic increase in the amount of product sold by the automobile manufacturers to dealers but may hurt the manufacturers's profitability.

Which of the following, if true, most strongly supports an argument for the incentive programs?

a. the amount of discount generally offered by manufacturers to dealers is carefully calculated to represent the minimum needed to draw consumers' attention to the product.
b. For many consumer products, the period of advertising discounted prices to consumers is about a week, which is not sufficiently long for consumers to become used to the sale price.
c. More prestigious auto makers do not use incentive programs because they dilute the company's brand name.
d. During such a promotion, retailers tend to accumulate in their warehouses inventory bought at discount; they then sell much of it later at their regular price.
e. If a manufacturer fails to offer such promotion but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product.

Question... why not D?

Make sure you have correct OA.
I also think it should be D too cuz if retailers, during such a promotion, accumulate cars at discount (or at lower or no margin) and sell them at later, manufacturers's slaes of cars at high margin after such promotions reduced, resulting in lower margin sales that obviously lowers the profitability.

E doesnot strengthen the argument.

2 points.
You are not asked to strengthen the argument or its conclusion.
D will not explain why the MANUFACTURERS will opt for the discount program.
Retired Moderator
Joined: 18 Jul 2008
Posts: 898
Re: CR: automobile manufacturures and incentives [#permalink]

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05 Jan 2009, 16:43
My vote goes for E!
Manager
Joined: 02 Aug 2007
Posts: 221
Schools: Life
Re: CR: automobile manufacturures and incentives [#permalink]

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05 Jan 2009, 22:33
hbs2012 wrote:
GMAT v2f

Autmobile manufacturers often offer incentive programs through which they discount the price of a car to their dealers for a promotion period when the product is advertised to consumers. Such incentive programs often result in a dramatic increase in the amount of product sold by the automobile manufacturers to dealers but may hurt the manufacturers's profitability.

Which of the following, if true, most strongly supports an argument for the incentive programs?

a. the amount of discount generally offered by manufacturers to dealers is carefully calculated to represent the minimum needed to draw consumers' attention to the product.
b. For many consumer products, the period of advertising discounted prices to consumers is about a week, which is not sufficiently long for consumers to become used to the sale price.
c. More prestigious auto makers do not use incentive programs because they dilute the company's brand name.
d. During such a promotion, retailers tend to accumulate in their warehouses inventory bought at discount; they then sell much of it later at their regular price.
e. If a manufacturer fails to offer such promotion but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product.

Question... why not D?

I say D, because it shows how it will hurt manufacturers.
Manager
Joined: 10 Aug 2008
Posts: 72
Re: CR: automobile manufacturures and incentives [#permalink]

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06 Jan 2009, 04:32
one more (E)

--== Message from GMAT Club Team ==--

This is not a quality discussion. It has been retired.

If you would like to discuss this question please re-post it in the respective forum. Thank you!

To review the GMAT Club's Forums Posting Guidelines, please follow these links: Quantitative | Verbal Please note - we may remove posts that do not follow our posting guidelines. Thank you.
Re: CR: automobile manufacturures and incentives   [#permalink] 06 Jan 2009, 04:32
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# GMAT v2f Autmobile manufacturers often offer incentive

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