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# Manufacturers sometimes discount the price of a product to

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

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28 Jun 2012, 19:52
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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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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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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!

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

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29 Jun 2012, 05:54
1
KUDOS
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)?

(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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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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28 Oct 2013, 23:06
Expert's post
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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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03 Nov 2013, 03:01
Hi Chiranjeev,

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

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03 Nov 2013, 03:53
bagdbmba wrote:
Hi Chiranjeev,

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.

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

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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.

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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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.

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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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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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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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]

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17 Dec 2016, 14:44
1
KUDOS
Definitely D.

Solid question. These are the ones you need to kick a** on so you have room to breathe for the 700+ questions.
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Re: Manufacturers sometimes discount the price of a product to [#permalink]

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04 Jan 2017, 05:18
Thank you so much for this detailed explanation

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

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28 Mar 2017, 05:15
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.

* * * * *
D) (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 answer proves that manufacturers could sell more product at a higher price because the retailers are making the excess profit.

Now let's a manufacturer has a promotion and the retailer sells at fair value. They would normally sell at \$5 but sold at \$3. Therefore the manufacturer lost \$2 of sales. E is actually quite similar to D for the overall industry. D is more tempting but E to me has equal weight.

(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.

See the questions asks about Manufacturers not Manufacturer's. Meaning we should be looking at the industry as a whole. The argument in E doesn't say we increase customers. Therefore E & D would both show that the industry as a whole loses. Let's do a quick example. Product normally is \$5 a deal makes it \$3. So company A doesn't sell for \$5 and company B gets the sale for \$3. Therefore \$2 in potential industry sales were lost due to the promotion.

I guess D is a little stronger considering it shows the promotions are mainly benefiting the retailer not the manufacturer. But E is not being properly assessed by people responding in this forum.
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Re: Manufacturers sometimes discount the price of a product to [#permalink]

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05 May 2017, 00:55
this was a very very interetsing question indeed. We had to look for an answer in which the importance of promotion wasn't highlighted.
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Re: Manufacturers sometimes discount the price of a product to [#permalink]

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08 Aug 2017, 04:05
3
KUDOS
******* Its a good question. ********

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.
Option A is talking about the manufacturer's strategy during the promotion period that would result in a dramatic increase in amount of product sold by the manufacturers to retailers. But it fails to answer how manufacturers could often make more profit by not holding the promotions. Therefore, incorrect.
Also, as per this option holding promotions is not that bad. But the conclusion is against holding the promotions.

(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.
Option B is talking about the duration/length of promotion period to consumers. It also fails to cater why the manufacturers should not hold promotion and can still gain profits.
As the period of promotion is less, the customers are not getting used to the prices during the promotion. Even after the promotion, when the prices will be higher, the customer would still be buying the products as they are not used to the promotional sales price. Thus, promotions are not that bad. It weakens the conclusion.

(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.
Irrelevant. It talks about the purpose of such promotions for products that are not newly introduced. But we are not concerned about those products and even the promotions.

(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 answers to our question why not holding promotions could still produce profits to manufacturers. CORRECT answer.
Detailed Explanation - Retailers have accumulated the products, bought from the manufacturers during the promotional period, in their warehouse inventory. After the promotion period is over, retailers will first try to finish/sell off the accumulated inventory and will then buy the fresh stock of products from manufacturers. So, after the promotion period, the sales of the manufacturers will slow down and thus this options supports the conclusion that the promotions are actually bad.

(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.
It still is talking about the benefits of offering promotions to the consumers. As per this option promotions are good. But we are not concerned with that.
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Re: Manufacturers sometimes discount the price of a product to [#permalink]

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08 Aug 2017, 23:57
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.

Retailers buy more product and store them in inventory and later sell these products at the regular price thus earning more profit.
If the manufacturer had not given discount to retailers then the manufacturers would have more profits

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

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09 Aug 2017, 00:35
arvind910619 wrote:
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.

Retailers buy more product and store them in inventory and later sell these products at the regular price thus earning more profit.
If the manufacturer had not given discount to retailers then the manufacturers would have more profits

arvind910619, I have one question for you here,

you wrote - Retailers buy more product and store them in inventory and later sell these products at the regular price thus earning more profit, but how does that affect the profits of the manufacturer?? As per your comment, what I get is that the manufacturers are not able to make more profits as retailers are selling these products at the regular price later. But thats not the case my friend.

It is basically because post-promotion the retailers will first sell off the accumulated inventory and then will buy the fresh products from manufacturers. So, during that time period sales of manufacturers will go down and thus there profits would be less, which could be more, if the promotions were not hold in the first place.

Please correct me, if I am wrong in anything. arvind910619
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Regards,
Varun

Trying my best..... will succeed definitely! :)

The Moment You Think About Giving Up, Think Of The Reason Why You Held On So Long.
+1 Kudos if you find this post helpful. :)

Do Check OG 2017 SC Solutions - http://gmatwithcj.com/solutions-gmat-official-guide-2017-sentence-correction-questions/

Re: Manufacturers sometimes discount the price of a product to   [#permalink] 09 Aug 2017, 00:35

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