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605-655 (Medium)|   Business|   Short Passage|                           
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Hi Experts,

GMATNinja KarishmaB

It can be inferred that the author of the passage would agree with which of the following statements about the appeal of service guarantees to customers?

E. In situations where customers expect a high level of customer service, a service guarantee is likely to make customers think that a business is worried about its service.

Why E is incorrect? I think that "high level of service" is expected in high priced restaurants, but nowhere in passage mentioned that in high priced restaurants, customer will think that a business is worried about its service. It is mentioned only for low priced restaurants.

Please let me know if this reason is correct.

Thank you for your help!
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Hi Experts,

GMATNinja KarishmaB

It can be inferred that the author of the passage would agree with which of the following statements about the appeal of service guarantees to customers?

E. In situations where customers expect a high level of customer service, a service guarantee is likely to make customers think that a business is worried about its service.

Why E is incorrect? I think that "high level of service" is expected in high priced restaurants, but nowhere in passage mentioned that in high priced restaurants, customer will think that a business is worried about its service. It is mentioned only for low priced restaurants.

Please let me know if this reason is correct.

Thank you for your help!

Question 2.

(Book Question: 413)
It can be inferred that the author of the passage would agree with which of the following statements about the appeal of service guarantees to customers?
A. Such guarantees are likely to be somewhat more appealing to customers of restaurants than to customers of other businesses.
B. Such guarantees are likely to be more appealing to customers who know what to anticipate in terms of service.
C. Such guarantees are likely to have less appeal in situations where customers are knowledgeable about a business’s product or service.
D. In situations where a high level of financial commitment is involved, a service guarantee is not likely to be very appealing.
E. In situations where customers expect a high level of customer service, a service guarantee is likely to make customers think that a business is worried about its service.

For
(5)
higher-priced restaurants, there is some evidence
that offering a guarantee increases the likelihood of
customer selection, probably reflecting the greater
financial commitment involved in choosing an
expensive restaurant. For lower-priced restaurants,
(10)
where one expects less assiduous service, Tucci and
Talaga found that a guarantee could actually have a
negative effect: a potential customer might think that
a restaurant offering a guarantee is worried about
its service.
Moreover, since customers understand a
(15)
restaurant’s product and know what to anticipate in
terms of service, they are empowered to question its
quality. This is not generally true in the case of skilled
activities such as electrical work, where, consequently,
a guarantee might have greater customer appeal.


The passage says that for higher priced restaurants, customers may prefer a service guarantee because of the financial commitment it involves. But for lower priced restaurant, a service guarantee may signal that the service of the place is questionable. Hence (D) and (E) both are incorrect.

D. In situations where a high level of financial commitment is involved, a service guarantee is not likely to be very appealing.

In situations where a high level of financial commitment is involved, a service guarantee is more appealing.

E. In situations where customers expect a high level of customer service, a service guarantee is likely to make customers think that a business is worried about its service.

In situations where customers expect a high level of customer service (high end restaurants), a service guarantee is more appealing. Customers worry about service at cheaper restaurants only.

The passage also says that since customers understand restaurants, the service guarantee doesn't add a lot of value. It adds more value when customers do not understand the work e.g. skilled activities such as electrical work. Then having a guarantee is re-assures them of the work done.
Hence (C) is correct.
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MartyMurray GMATNinja Can you please explain question 1? I was confused between option B and option E.
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MartyMurray GMATNinja Can you please explain question 1? I was confused between option B and option E.
­(E) is tempting because the second paragraph does indeed consider the effect that service-quality guarantees can have on the service provided by a restaurant.

But remember that we're looking for the primary purpose of the passage, not the just the second paragraph. The advantages and disadvantages explored in the first paragraph have nothing to do with how the level (or quality) of service can be impacted by a service-quality guarantee. Instead, the first paragraph explores how such guarantees can affect customer selection (whether or not the customer goes to the restaurant) and customer expectations.

Yes, the passage does discuss the impact that service-quality guarantees can have on the service provided by a restaurant, but that's part of a broader discussion of the advantages and disadvantages of service-quality guarantees. Most of the advantages (and disadvantages) discussed relate to the effect on customer perception, not on the actual service provided.

So (B) is a better choice.
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Quote:

Quote:

Quote:
Hello GMATNinja
Thank you for the answer brief. However, I still find it hard to understand what the author means when he says: they are empowered to question its quality.

Doesn't he mean that if a person knows the service, s/he questions (Doubts) the quality?
Even though it wouldn't make sense for people to doubt the quality if they are certain of the service quality but still as I was reading I understood this meaning.
Let's take a close look at the line you mentioned:
Quote:
Moreover, since customers understand a restaurant’s product and know what to anticipate in terms of service, they are empowered to question its quality.
If someone is "empowered to question" something's quality, this tells us they have the power to question its quality. In other words, they are able to question its quality.

So why would customers be "empowered" to question a restaurant's quality? According to the author, it's because they "UNDERSTAND a restaurant's product and know what to anticipate in terms of service." In short, since customers understand basically how a restaurant works, they can judge the quality of its service.

According to the author, all of this is "not generally true in the case of skilled activities such as electrical work." Because for things like electrical work, customers probably do not "know what to anticipate in terms of service." Put another way -- at restaurants, people know what good service looks like, so they can judge its quality. For more skilled things like electrical work, customers are less knowledgeable, so they're less able to judge the quality of service.

By why is the author discussing all this? What conclusion does s/he draw? Notice this discussion ends with the statement that in cases like electrical work, "a guarantee might have greater customer appeal." This is in contrast to restaurants, where a service guarantee "could actually have a negative effect."

Let's take another look at (C):
Quote:
C. Such guarantees are likely to have less appeal in situations where customers are knowledgeable about a business’s product or service.
Recall the author's conclusion from the preceding discussion -- in situations where customers "know what to anticipate in terms of service" (such as restaurants), service guarantees could have a negative affect. But in situations like electrical work, where they don't know what to anticipate, "a guarantee might have greater customer appeal."

This conclusion lines up nicely with the idea that "guarantees are likely to have less appeal" when "customers are knowledgeable about a business’s product or service." Since we can infer the author would agree with (C), it's correct.

I hope that helps!
­GMATNinja

As you rightly mentioned the lines where one could find the clues to answer this question 2,
In situations where customers "know what to anticipate in terms of service" (such as restaurants), service guarantees could have a negative affect. But in situations like electrical work, where they don't know what to anticipate, "a guarantee might have greater customer appeal."

Lines relevant from the passage: "Moreover, since customers understand a restaurant’s product and know what to anticipate in terms of service, they are empowered to question its quality. This is not generally true in the case of skilled activities such as electrical work, where, consequently, a guarantee might have greater customer appeal"

"This" here refers to the scenario where customers understand product and know what to anticipate in terms of service i.e about electric equipment and anticipates a good quality of service from electrician. It suggests that guarantee has greater customer appeal in this case

Lets see what Option c says:
Such guarantees are likely to have less appeal in situations where customers are knowledgeable about a business’s product or service.

While this could be the best choice available, but it does not look like a convincing argument especially when the question is generic in nature. Had it confined to restaurant industry, this would have been no brainer

Could you please provide your expert comments?­
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As you rightly mentioned the lines where one could find the clues to answer this question 2,

In situations where customers "know what to anticipate in terms of service" (such as restaurants), service guarantees could have a negative affect. But in situations like electrical work, where they don't know what to anticipate, "a guarantee might have greater customer appeal."

Lines relevant from the passage: "Moreover, since customers understand a restaurant’s product and know what to anticipate in terms of service, they are empowered to question its quality. This is not generally true in the case of skilled activities such as electrical work, where, consequently, a guarantee might have greater customer appeal"

"This" here refers to the scenario where customers understand product and know what to anticipate in terms of service i.e about electric equipment and anticipates a good quality of service from electrician. It suggests that guarantee has greater customer appeal in this case

Lets see what Option c says:

Such guarantees are likely to have less appeal in situations where customers are knowledgeable about a business’s product or service.

While this could be the best choice available, but it does not look like a convincing argument especially when the question is generic in nature. Had it confined to restaurant industry, this would have been no brainer

Could you please provide your expert comments?­
I'm not quite sure that I'm interpreting your question correctly, but the issue might lie with this portion of your analysis:

Quote:
"This" here refers to the scenario where customers understand product and know what to anticipate in terms of service i.e about electric equipment and anticipates a good quality of service from electrician. It suggests that guarantee has greater customer appeal in this case
You're correct to say that "this" refers to a situation where the customers DO understand the product, KNOW what to anticipate in terms of service, and thus ARE empowered to question its quality.

But electrical work is NOT an example of such a situation. Electrical work is an example of a situation where "this" is NOT generally true. In other words, electrical work is a an example of a situation where customers generally do NOT understand the product, do NOT know what to anticipate in terms of service, and thus are NOT empowered to question the quality.

In such situations (e.g. electrical work), service guarantees might have greater customer appeal. But when customers ARE knowledgeable (e.g. restaurants), service guarantees are likely to have less appeal. So (C) works perfectly.

For anyone who missed it, a full breakdown of Question 2 can be found here: https://gmatclub.com/forum/in-their-study-of-whether-offering-a-guarantee-of-service-quality-will-242450-20.html#p2923129.
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