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Manufacturers sometimes discount the price of a product to

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Re: CR: Sales Promo [#permalink]

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sondenso wrote:
prasannar wrote:
Manufacturers sometimes discount the price of a product to retailers for a promotion period when the product is advertised to consumers. Such promotion often result in a dramatic increase in amount of product sold by the manufacturers to retailers. Nevertheless, the manufacturers could often make more profit by not holding the promotions.

Which of the following, if true, most strongly supports the claim above about the manufacturers’ profit?

(A) The amount of discount generally offered by manufacturers to retailers 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, not sufficiently long for consumers to become used to the sale price.

(C) For products that are not newly introduced, the purpose of such promotions is to keep the products in the minds of consumers and to attract consumers who are currently using competing products.

(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 promotions but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer’s product.


The very interesting in GMAC reasoning is making a confusal to test taker, I think so!

Let see the slighly modification I made on this, and you will see that it is easier than it actually is!

Manufacturers sometimes discount the price of a product to retailers for a promotion period when the product is advertised to consumers. Such promotion often result in a dramatic increase in amount of product sold by the manufacturers to retailers. So, the manufacturers can increase their profit by holding promotions.

Which of the following, if true, most strongly shows that the manufacturers CAN NOT get the goal?

Stop and you see that at the very first sentence, the author appraise how good and best promotion can help increase sales of the manufacturers. But why it does not help increase profits. There must be something problemetic in "promotions"

ATTACK THE PROMOTIONS is slogan! :lol:


Can you please explain me the question?
thanks to help.....

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Re: CR: Sales Promo [#permalink]

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New post 19 Sep 2011, 03:16
+1 for D. Tok me 4 minutes. Whooo....

Manufacturer----> Retailer>>>> discount. When:

manufacturer is advertising.

conclusion: Manufacturer should not sell at discount. Manufacturer looses money. WHy???

Advertising & promotion (together) --- Gud price & availability to consumer. BUt if the retailer stores the goods & does not sells it the purpose of manufacturer is beaten. I know this is not full proof but this is what i thought.

Can somebody shed some more light on this???

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Re: CR: Sales Promo [#permalink]

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In questions where we have to evaluate a decision, I normally establish a relationship and then try to see which option has the most positive or negative impact on the relationship.
In this particular question, for example, the relationship is between the promotions and the profit earned. And the relationship is that the organization will earn more profit if promotions are not held. Lets ask the question: Why would it happen? There could be couple of reasons for that:

1. The customers are indifferent towards promotions and the sales of products is not increasing at all.
2. The discounted prices are not reaching customers at all. So customers are actually not aware of the promotions and they are buying the product at regular price. So if thats the case the company should not offer discounts.

Now lets evaluate options based on our understanding:

prasannar wrote:
Manufacturers sometimes discount the price of a product to retailers for a promotion period when the product is advertised to consumers. Such promotion often result in a dramatic increase in amount of product sold by the manufacturers to retailers. Nevertheless, the manufacturers could often make more profit by not holding the promotions.

Which of the following, if true, most strongly supports the claim above about the manufacturers’ profit?

(A) The amount of discount generally offered by manufacturers to retailers is carefully calculated to represent the minimum needed to draw consumers’ attention to the product. - This statement is actually weakening the claim. INCORRECT

(B) For many consumer products the period of advertising discounted prices to consumers is about a week, not sufficiently long for consumers to become used to the sale price. - This statement talks nothing about the relationship between profit and discounted prices. INCORRECT

(C) For products that are not newly introduced, the purpose of such promotions is to keep the products in the minds of consumers and to attract consumers who are currently using competing products. -Again very vague statement and can not come to clear conclusions with this statement. Lets think like this, if this statement were true, will the organization earn more profit by not offering discount. The answer is NO. Infact on second thoughts, this statement weakens the conclusion. INCORRECT

(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. - This one makes sense and is aligned with our previous thoughts. See thats the benefit of paraphrasing :) CORRECT

(E) If a manufacturer fails to offer such promotions but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer’s product.- So what?? Out of scope. INCORRECT

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Re: Discount for promotion [#permalink]

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akshathbs wrote:
I think beyondgmatscore did a good job explaining this question .
Anyways here is my take on this ::
Manuf Guy ( MG) , retailer guy ( RG)
MG----->RG---->PEOPLE !

this is how this chain works
We are concerned about MG's profits
so if MG offers a discount to increase it's consumer base ( during promotion period) , and RG acts as a middlemen and keeps the stuff for himself and later sells it at a higher price so he is essentially helping himself( the amount of money earned by RG is equal to the discount btw !) , so if MG would not have kept this PROMOTION PERIOD deal things he would have not lost on anything , rather thn saved on the discount that RG ripped from him :) so in conclusion RG is a kewl guy and MG is a sucker :p
Good problem btw ..


I agree with the OA and understand why OA is correct but I have some concern on how to interpret the question:

We must have the model of Manufacturer --> Retailer --> People in order to support this argument. We need this, otherwise the OA is not correct. If the manufacturers both sell the product DIRECTLY to the consumers (which some manufacturers do in real world, i.e. Coca Cola) and through retailers (i.e supermarket), then the promotion can actually increase their profits despite the fact that the retailers buy as many products as possible during the promotion period and then sell them at retail price as stated in D. In that case, since we don't know any information related to the price and number of units sold in comparison of with-promotion with without-promotion, we can't conclude anything about the profit.

Now, even though one knows the model MG --> RG --> People, meaning that the profit of the MG comes only from the RG, one can't still conclude that the MG makes less money with-promotion compared to without-promotion for the very same reason: we don't know any information about the number of products sold with-promotion and without-promotion. What if when without-promotion the RG buys significantly less product than they do with-promotion? So the MG can still make more money, hence profit, if the number of products sold in the 2 situations greatly differs.

Another question: I'm not a business guy, who do I supposed to know this model MG --> RG --> People?

Anyone can shed some light please? Thanks a lot!

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Re: Manufacturers sometimes discount the price of a product to [#permalink]

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New post 14 Apr 2012, 02:38
D is the answer

If we paraphase the arguments we clearly see D as right

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Manufacturers sometimes discount the price of a product to [#permalink]

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Manufacturers sometimes discount the price of a product to retailers for a promotion period when the product is advertised to consumers. Such promotions often results in a dramatic increase in amount of product sold by the manufacturers to retailers. Nevertheless, the manufacturers could often make more profit by not holding the promotion.

Which of the following, if true, most strongly supports the claim above about the manufacturer's profit?

A. The amount of discount generally offered by manufacturers to retailers is carefully calculated to represent the minimum needed to draw consumer's attention to the product.
B. For many consumer products the period of advertising discounted prices to consumers is about a week, not sufficiently long for consumers to become used to the sale price.
C. For products that are not newly introduced, the purpose of such promotions is to keep the product in the minds of consumers and to attract consumers who are currently using competing products.
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 promotions but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product.

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Nevertheless, the manufacturers could often make more profit by not holding the promotion : Conclusion.

This conclusion is based on the assumption that the product continues to sell even after the promotion has ended.
Now go thro' the options and see which option addresses above point.


The amount of discount generally offered by manufacturers to retailers is carefully calculated to represent the minimum needed to draw consumer's attention to the product. Not Relevant. Does not address the conclusion.
For many consumer products the period of advertising discounted prices to consumers is about a week, not sufficiently long for consumers to become used to the sale price.Very Specific and does not address "more profit"
For products that are not newly introduced, the purpose of such promotions is to keep the product in the minds of consumers and to attract consumers who are currently using competing products.Not relevant
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. This option address the point we discussed.
If a manufacturer fails to offer such promotions but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product. Arguments speaks about manufacturer in general
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Re: Manufacturers sometimes discount the price of a product to [#permalink]

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New post 28 Jun 2012, 20:17
dvinoth86 wrote:
Nevertheless, the manufacturers could often make more profit by not holding the promotion : Conclusion.

This conclusion is based on the assumption that the product continues to sell even after the promotion has ended.
Now go thro' the options and see which option addresses above point.


The amount of discount generally offered by manufacturers to retailers is carefully calculated to represent the minimum needed to draw consumer's attention to the product. Not Relevant. Does not address the conclusion.
For many consumer products the period of advertising discounted prices to consumers is about a week, not sufficiently long for consumers to become used to the sale price.Very Specific and does not address "more profit"
For products that are not newly introduced, the purpose of such promotions is to keep the product in the minds of consumers and to attract consumers who are currently using competing products.Not relevant
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. This option address the point we discussed.
If a manufacturer fails to offer such promotions but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product. Arguments speaks about manufacturer in general

thanks for helping me out :)

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Re: Manufacturers sometimes discount the price of a product to [#permalink]

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New post 29 Jun 2012, 05:23
sarb wrote:
dvinoth86 wrote:
Nevertheless, the manufacturers could often make more profit by not holding the promotion : Conclusion.

This conclusion is based on the assumption that the product continues to sell even after the promotion has ended.
Now go thro' the options and see which option addresses above point.


The amount of discount generally offered by manufacturers to retailers is carefully calculated to represent the minimum needed to draw consumer's attention to the product. Not Relevant. Does not address the conclusion.
For many consumer products the period of advertising discounted prices to consumers is about a week, not sufficiently long for consumers to become used to the sale price.Very Specific and does not address "more profit"
For products that are not newly introduced, the purpose of such promotions is to keep the product in the minds of consumers and to attract consumers who are currently using competing products.Not relevant
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. This option address the point we discussed.
If a manufacturer fails to offer such promotions but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product. Arguments speaks about manufacturer in general

thanks for helping me out :)


Anytime buddy!

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Re: Manufacturers sometimes discount the price of a product to [#permalink]

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Premise:-Manufactures think that the advertisements are causing more demand from the consumers so the manufacturer discounts the rate to the retailers to gain larger market share and spend money on advertisements.

Question stem:-If Manufacturers stop advertisements then how will be they benefited (acquire more market share/more revenue)?

Paraphasing:-There should be some link between the insufficiency of the advertisement over the enhanced sales(between manufacturer and the retailers) during the advertisement period.

(D)says that even if the the manufacturers doesn't spent on advertisements they can still have the same sales to the retailers because retailers buy from manufactures and sell the customer a higher price which means two things:
(i) manufacturers can save money spent on Ads.
(ii) end users are okay with the non-discounted/regular price ( because retailers will eventually sell the bought products)

+1 for (D)
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Re: Manufacturers sometimes discount the price of a product to [#permalink]

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New post 27 Oct 2013, 00:54
ps_dahiya wrote:
Official Guide for GMAT Verbal Review, 2nd Edition

Practice Question
Question No.: 68
Page: 143
Difficulty:


Manufacturers sometimes discount the price of a product to retailers for a promotion period when the product is advertised to consumers. Such promotions often result in a dramatic increase in amount of product sold by the manufacturers to retailers. Nevertheless, the manufacturers could often make more profit by not holding the promotions.

Which of the following, if true, most strongly supports the claim above about the manufacturers' profit?

(A) The amount of discount generally offered by manufacturers to retailers 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, not sufficiently long for consumers to become used to the sale price.
(C) For products that are not newly introduced, the purpose of such promotions is to keep the products in the minds of consumers and to attract consumers who are currently using competing products.
(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 falls to offer such promotions but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product.


Hi Verbal Experts,
I've some doubts on this question -

1. Why option D is preferred over option B? Is it because of the fact that although the consumers don't become used to the sale price of the promotional offer because of short promotion-period, not necessarily they'll move away from buying the products post-promotion at a higher price.So, option B becomes under 'might be true' segment...! Please explain.

2. Argument says that although during promotion Manufacturers make profit and witness dramatic increase in amount of product sold to retailers, without promotions they'll actually make more profit. Now, per option D,we can say retailers during post- promotion period will first clear the inventory accumulated during promotional offer. So eventually there will be some decline in the fresh sales after promotion-period is over. But how we can say that this decline will be such that that it'll not only offset the 'dramatic increase' in sales to retailers during promotion but rather will bring down the total sales (hence revenue) of both with and without promotion-period (than the same for the similar overall time frame without promotion,considering that there will no promotion at all any time)?

Moreover, manufacturers are only concerned with the sales associated with the retailers not to the consumers directly I think. They sell the products to the retailers and take away the profits.
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Re: Manufacturers sometimes discount the price of a product to [#permalink]

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bagdbmba wrote:
Manufacturers sometimes discount the price of a product to retailers for a promotion period when the product is advertised to consumers. Such promotions often result in a dramatic increase in amount of product sold by the manufacturers to retailers. Nevertheless, the manufacturers could often make more profit by not holding the promotions.

Which of the following, if true, most strongly supports the claim above about the manufacturers' profit?

(A) The amount of discount generally offered by manufacturers to retailers 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, not sufficiently long for consumers to become used to the sale price.
(C) For products that are not newly introduced, the purpose of such promotions is to keep the products in the minds of consumers and to attract consumers who are currently using competing products.
(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 falls to offer such promotions but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product.

Hi Verbal Experts,
I've some doubts on this question -

1. Why option D is preferred over option B? Is it because of the fact that although the consumers don't become used to the sale price of the promotional offer because of short promotion-period, not necessarily they'll move away from buying the products post-promotion at a higher price.So, option B becomes under 'might be true' segment...! Please explain.


Let me begin with the most problematic thing in your analysis. What does "might be true" segment mean in a "Strengthen" question? I can digest this term in Inference and with a lot of hesitation, in assumption questions too but using "might be true" in Strengthen question is a felony. More than the use of this term, I am worried about your general approach to strengthen questions.

Now, how you are interpreting option B seems to be correct. If this is your interpretation, does option B support or weaken the conclusion? If people don't become used to low sales price, does it not strengthen the belief the promotions are not that bad? In this case, doesn't it weaken the conclusion suggesting against the promotions?

bagdbmba wrote:
2. Argument says that although during promotion Manufacturers make profit and witness dramatic increase in amount of product sold to retailers, without promotions they'll actually make more profit. Now, per option D,we can say retailers during post- promotion period will first clear the inventory accumulated during promotional offer. So eventually there will be some decline in the fresh sales after promotion-period is over. But how we can say that this decline will be such that that it'll not only offset the 'dramatic increase' in sales to retailers during promotion but rather will bring down the total sales (hence revenue) of both with and without promotion-period (than the same for the similar overall time frame without promotion,considering that there will no promotion at all any time)?

Moreover, manufacturers are only concerned with the sales associated with the retailers not to the consumers directly I think. They sell the products to the retailers and take away the profits.

I agree. Option B does not "conclusively establish" the conclusion. But that is not the purpose of a strengthener. The purpose is just to increase your belief. After reading option B, don't you become more convinced in the conclusion that the company can make more profits without promotions? The objective of a strengthener is to increase the confidence or belief in the conclusion, not to prove it.

Hope this helps.

Thanks,
Chiranjeev
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Re: Manufacturers sometimes discount the price of a product to [#permalink]

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Hi Chiranjeev,
Thanks for your reply but I'm REALLY NOT able to understand your analysis as of now. :-(

I'd request you to kindly come up with your detail analysis of meaning with emphasize on 'Why option B is wrong and D is correct'.

Look forward to hearing from you...
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New post 03 Nov 2013, 03:53
bagdbmba wrote:
Hi Chiranjeev,
Thanks for your reply but I'm REALLY NOT able to understand your analysis as of now. :-(

I'd request you to kindly come up with your detail analysis of meaning with emphasize on 'Why option B is wrong and D is correct'.

Look forward to hearing from you...


Hi,

I can understand your problem. Instead of providing detailed solution, I have actually asked leading questions. However, there is a purpose behind doing so. I want to come up with the answer yourself, rather than I providing the same. There is an English proverb:

Give a man a fish, and you feed him for a day; show him how to catch fish, and you feed him for a lifetime.

I would just be very happy if you are able to think through these things on your own.

Let's try it. I am there to help you. Why don't you answer the questions I asked in my previous post?

Thanks,
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Re: Manufacturers sometimes discount the price of a product to [#permalink]

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New post 12 Nov 2013, 07:57
bagdbmba wrote:
Manufacturers sometimes discount the price of a product to retailers for a promotion period when the product is advertised to consumers. Such promotions often result in a dramatic increase in amount of product sold by the manufacturers to retailers. Nevertheless, the manufacturers could often make more profit by not holding the promotions.

Which of the following, if true, most strongly supports the claim above about the manufacturers' profit?

(A) The amount of discount generally offered by manufacturers to retailers 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, not sufficiently long for consumers to become used to the sale price.
(C) For products that are not newly introduced, the purpose of such promotions is to keep the products in the minds of consumers and to attract consumers who are currently using competing products.
(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 falls to offer such promotions but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product.

Hi Verbal Experts,
I've some doubts on this question -

1. Why option D is preferred over option B? Is it because of the fact that although the consumers don't become used to the sale price of the promotional offer because of short promotion-period, not necessarily they'll move away from buying the products post-promotion at a higher price.So, option B becomes under 'might be true' segment...! Please explain.

egmat wrote:
Let me begin with the most problematic thing in your analysis. What does "might be true" segment mean in a "Strengthen" question? I can digest this term in Inference and with a lot of hesitation, in assumption questions too but using "might be true" in Strengthen question is a felony. More than the use of this term, I am worried about your general approach to strengthen questions.

Yeah! I got this part wrong."might be true" doesn't come with "Strengthen" question actually. Sorry!

egmat wrote:
Now, how you are interpreting option B seems to be correct. If this is your interpretation, does option B support or weaken the conclusion? If people don't become used to low sales price, does it not strengthen the belief the promotions are not that bad? In this case, doesn't it weaken the conclusion suggesting against the promotions?


Well, my logic was - as the consumers don't become used to the sale price because of short promotion-period, hence they'll continue to buy the products post-promotion at a higher price and this will continue the sales after promotion period. So, basically I think this option neither strengthen nor weaken the conclusion as it doesn't explicitly indicate whether the sales without promotion will be higher than the same with promotion.

So, ultimately option D remains as the only option to be considered as it's evident that retailers will first clear up their accumulated stocks/inventories before purchasing any fresh stocks from Manufacturers after the promotion is over. So, eventually post-promotion sales would slow down hence the profits would come down. I got confused with option D because I brought in the concept of "might be true" here incorrectly in my earlier post.

Am I getting it properly now? Your thoughts please?

egmat wrote:
bagdbmba wrote:
2. Argument says that although during promotion Manufacturers make profit and witness dramatic increase in amount of product sold to retailers, without promotions they'll actually make more profit. Now, per option D,we can say retailers during post- promotion period will first clear the inventory accumulated during promotional offer. So eventually there will be some decline in the fresh sales after promotion-period is over. But how we can say that this decline will be such that that it'll not only offset the 'dramatic increase' in sales to retailers during promotion but rather will bring down the total sales (hence revenue) of both with and without promotion-period (than the same for the similar overall time frame without promotion,considering that there will no promotion at all any time)?

Moreover, manufacturers are only concerned with the sales associated with the retailers not to the consumers directly I think. They sell the products to the retailers and take away the profits.

I agree. Option B does not "conclusively establish" the conclusion. But that is not the purpose of a strengthener. The purpose is just to increase your belief. After reading option B, don't you become more convinced in the conclusion that the company can make more profits without promotions? The objective of a strengthener is to increase the confidence or belief in the conclusion, not to prove it.

Chiranjeev


I think you meant option D here...NOT B. Right? Is my above mentioned reasoning for option D correct?
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Re: Manufacturers sometimes discount the price of a product to [#permalink]

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New post 25 Nov 2013, 06:29
bagdbmba wrote:
egmat wrote:
Now, how you are interpreting option B seems to be correct. If this is your interpretation, does option B support or weaken the conclusion? If people don't become used to low sales price, does it not strengthen the belief the promotions are not that bad? In this case, doesn't it weaken the conclusion suggesting against the promotions?


Well, my logic was - as the consumers don't become used to the sale price because of short promotion-period, hence they'll continue to buy the products post-promotion at a higher price and this will continue the sales after promotion period. So, basically I think this option neither strengthen nor weaken the conclusion as it doesn't explicitly indicate whether the sales without promotion will be higher than the same with promotion.

So, ultimately option D remains as the only option to be considered as it's evident that retailers will first clear up their accumulated stocks/inventories before purchasing any fresh stocks from Manufacturers after the promotion is over. So, eventually post-promotion sales would slow down hence the profits would come down. I got confused with option D because I brought in the concept of "might be true" here incorrectly in my earlier post.

Am I getting it properly now? Your thoughts please?


Yes, you are correct now.

bagdbmba wrote:
egmat wrote:
bagdbmba wrote:
2. Argument says that although during promotion Manufacturers make profit and witness dramatic increase in amount of product sold to retailers, without promotions they'll actually make more profit. Now, per option D,we can say retailers during post- promotion period will first clear the inventory accumulated during promotional offer. So eventually there will be some decline in the fresh sales after promotion-period is over. But how we can say that this decline will be such that that it'll not only offset the 'dramatic increase' in sales to retailers during promotion but rather will bring down the total sales (hence revenue) of both with and without promotion-period (than the same for the similar overall time frame without promotion,considering that there will no promotion at all any time)?

Moreover, manufacturers are only concerned with the sales associated with the retailers not to the consumers directly I think. They sell the products to the retailers and take away the profits.

I agree. Option B does not "conclusively establish" the conclusion. But that is not the purpose of a strengthener. The purpose is just to increase your belief. After reading option B, don't you become more convinced in the conclusion that the company can make more profits without promotions? The objective of a strengthener is to increase the confidence or belief in the conclusion, not to prove it.

Chiranjeev


I think you meant option D here...NOT B. Right? Is my above mentioned reasoning for option D correct?


Yes, I meant option D. Sorry for the typo. Your reasoning for option D is correct now.

Thanks,
Chiranjeev
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Re: Manufacturers sometimes discount the price of a product to [#permalink]

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New post 07 Apr 2014, 06:58
I bungled this up because I completely overlooked the presence of a retailer. (Didn't read the question properly). My thought process was manufacturer & consumer. For some reason, I sort of assumed manufacturer and retailer are one and same, hence option (d) looked weak to me. Anyway, lesson learnt! Read questions more thoroughly for detail when all answers look wrong.

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Re: Manufacturers sometimes discount the price of a product to [#permalink]

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Re: Manufacturers sometimes discount the price of a product to [#permalink]

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New post 27 Sep 2015, 04:01
D, assuming that if and only if retailers buy same/more quantity of products from manufacturers despite any discount offered or not !
Because with discount retailers TEND TO.....AT DISCOUNT PRICE; so it is not sure whether retailers will continue to do so if discounts are withdrawn.

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Re: Manufacturers sometimes discount the price of a product to [#permalink]

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New post 11 Jul 2016, 02:26
ps_dahiya wrote:
Official Guide for GMAT Verbal Review, 2nd Edition

Practice Question
Question No.: 68
Page: 143
Difficulty:


Manufacturers sometimes discount the price of a product to retailers for a promotion period when the product is advertised to consumers. Such promotions often result in a dramatic increase in amount of product sold by the manufacturers to retailers. Nevertheless, the manufacturers could often make more profit by not holding the promotions.

Which of the following, if true, most strongly supports the claim above about the manufacturers' profit?

(A) The amount of discount generally offered by manufacturers to retailers 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, not sufficiently long for consumers to become used to the sale price.
(C) For products that are not newly introduced, the purpose of such promotions is to keep the products in the minds of consumers and to attract consumers who are currently using competing products.
(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 falls to offer such promotions but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product.


Manufacturers offer promotion when the products are being advertise. Promotions significantly increase product sold to retailers. But manufacturer could have more profit by not offering promotion in the first place.

A - Irrelevant. (A) is just describing a mechanism with no effect on the argument
B - Irrelevant. It is talking about how the consumer get used to the discounted price
C - Irrelevant. Explaining another mechanism with no effect on the argument
D - Correct. This way, the amount product sold in case without the promotion is the same as in case with the promotion. The only difference is the difference in price. Hence, regular price would provide more profit.
E - Opposite. It weakens the argument

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Re: Manufacturers sometimes discount the price of a product to   [#permalink] 11 Jul 2016, 02:26

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