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# Manufacturers sometimes discount the price of a product to retailers

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Senior Manager
Joined: 17 Sep 2016
Posts: 251
Re: Manufacturers sometimes discount the price of a product to retailers  [#permalink]

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20 Mar 2018, 06:43
Quote:
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.

Hi mikemcgarry, GMATNinjaTwo, GMATNinja, MagooshExpert Carolyn, sayantanc2k,

I think i must miss something on B , but i have no idea what's my problem, please help to clarify
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.
If the duration of promotion is so short that customers have not yet realised the sale price, then they possible to buy commidities at a regualr price ,which is higher than sale price, then it is apparent to increase the revenues of manufacture,

Does B mean supportable ?

Have a nice day

>_~
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Joined: 20 Nov 2016
Posts: 264
Re: QOTD: Manufacturers sometimes discount the price of a product  [#permalink]

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20 Mar 2018, 08:08
zoezhuyan wrote:
Quote:
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.

Hi mikemcgarry, GMATNinjaTwo, GMATNinja, MagooshExpert Carolyn, sayantanc2k,

I think i must miss something on B , but i have no idea what's my problem, please help to clarify
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.
If the duration of promotion is so short that customers have not yet realised the sale price, then they possible to buy commidities at a regualr price ,which is higher than sale price, then it is apparent to increase the revenues of manufacture,

Does B mean supportable ?

Have a nice day

>_~

Responding to a question from the retired thread...

zoezhuyan, (B) does not say that customers will not REALIZE the sale price. It just means that they won't grow accustomed to it. In other words, if you are NOT accustomed to a sale price, you will be excited by the discount. But once you grow accustomed to it, you will EXPECT the lower price. If you are accustomed the sale price and the price is then RAISED back to the original, you might not want to buy the product anymore. You became so used to the sale price that the original price now seems like a rip off!

I hope that helps.
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Joined: 17 Sep 2016
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Re: QOTD: Manufacturers sometimes discount the price of a product  [#permalink]

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21 Mar 2018, 01:14
GMATNinjaTwo wrote:
zoezhuyan wrote:
Quote:
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.

Hi mikemcgarry, GMATNinjaTwo, GMATNinja, MagooshExpert Carolyn, sayantanc2k,

I think i must miss something on B , but i have no idea what's my problem, please help to clarify
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.
If the duration of promotion is so short that customers have not yet realised the sale price, then they possible to buy commidities at a regualr price ,which is higher than sale price, then it is apparent to increase the revenues of manufacture,

Does B mean supportable ?

Have a nice day

>_~

Responding to a question from the retired thread...

zoezhuyan, (B) does not say that customers will not REALIZE the sale price. It just means that they won't grow accustomed to it. In other words, if you are NOT accustomed to a sale price, you will be excited by the discount. But once you grow accustomed to it, you will EXPECT the lower price. If you are accustomed the sale price and the price is then RAISED back to the original, you might not want to buy the product anymore. You became so used to the sale price that the original price now seems like a rip off!

I hope that helps.

Ohhh, no, I misunderstood it again.
in fact, B says the duration of promotion is so short that people haven't accustomed to the sales price, people soon buy commidities on regualr price,

so maybe people won't buy commidities because they want to wait another promotion, maybe they will buy commidities because they can't wait another promotion.
so it does not bearing on the argument, right?

Have a nice dya
>_~
Senior Manager
Joined: 17 Sep 2016
Posts: 251
QOTD: Manufacturers sometimes discount the price of a product  [#permalink]

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21 Mar 2018, 06:26
zoezhuyan wrote:
GMATNinjaTwo wrote:
Responding to a question from the retired thread...

zoezhuyan, (B) does not say that customers will not REALIZE the sale price. It just means that they won't grow accustomed to it. In other words, if you are NOT accustomed to a sale price, you will be excited by the discount. But once you grow accustomed to it, you will EXPECT the lower price. If you are accustomed the sale price and the price is then RAISED back to the original, you might not want to buy the product anymore. You became so used to the sale price that the original price now seems like a rip off!

I hope that helps.

Ohhh, no, I misunderstood it again.
in fact, B says the duration of promotion is so short that people haven't accustomed to the sales price, people soon buy commidities on regualr price,

so maybe people won't buy commidities because they want to wait another promotion, maybe they will buy commidities because they can't wait another promotion.
so it does not bearing on the argument, right?

Have a nice dya
>_~

hi GMATNinjaTwo.

my new interpretation on B
because of the short duration of promotion, the customers do not become used the sale price and the impact of promotion is weak, so they think buying commidities on regualr price is common action,
while, if the duration of promotion is long enough that customer view the low/sale price is normal new price, if the price goes back to formal regular price, which is higher than sale price, then customer would unwilling to buy them, leading decrease the sales.

another question come up,
my above new interpretation seems impact on retailers, I dont think it impacts on the manufacture's profits.

As per D,
I can think two scenarios -- promotion and non promotion, according to D, the total amount of production is the same when promotion as when no promotion
Scenario #1 promotion, -- the manufactures low their price to be \$10 , then result in increase dramtic amount of productions, say 100, then the profit = 10*100 - cost
Scenario #2 non promtion -- the manufactures regular price is 15, the amount of prodctions is 100 as well, then the profit = 12*100 - cost,

so , we can see the profit during promotion is lower than that during non promotion.

Would you please point out my fault?

BTW, can you tell me the link that I can search SC and CR QOTDs ?
I get a link https://gmatclub.com/forum/gmat-question-of-the-day-2017-edition-239951.html from signature of GMATNinja, a one not easy to search,
I also get a link from GMATNinja's reply, https://gmatclub.com/forum/search.php?search_id=tag&tag_id=1196, there are only SC QOTDs and search tag's spectrum does not narrow to the SC list of the link,

Have a nice day
>_~
GMAT Club Verbal Expert
Joined: 20 Nov 2016
Posts: 264
Re: QOTD: Manufacturers sometimes discount the price of a product  [#permalink]

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21 Mar 2018, 10:36
zoezhuyan wrote:
zoezhuyan wrote:
GMATNinjaTwo wrote:
Responding to a question from the retired thread...

zoezhuyan, (B) does not say that customers will not REALIZE the sale price. It just means that they won't grow accustomed to it. In other words, if you are NOT accustomed to a sale price, you will be excited by the discount. But once you grow accustomed to it, you will EXPECT the lower price. If you are accustomed the sale price and the price is then RAISED back to the original, you might not want to buy the product anymore. You became so used to the sale price that the original price now seems like a rip off!

I hope that helps.

Ohhh, no, I misunderstood it again.
in fact, B says the duration of promotion is so short that people haven't accustomed to the sales price, people soon buy commidities on regualr price,

so maybe people won't buy commidities because they want to wait another promotion, maybe they will buy commidities because they can't wait another promotion.
so it does not bearing on the argument, right?

Have a nice dya
>_~

hi GMATNinjaTwo.

my new interpretation on B
because of the short duration of promotion, the customers do not become used the sale price and the impact of promotion is weak, so they think buying commidities on regualr price is common action,
while, if the duration of promotion is long enough that customer view the low/sale price is normal new price, if the price goes back to formal regular price, which is higher than sale price, then customer would unwilling to buy them, leading decrease the sales.

another question come up,
my above new interpretation seems impact on retailers, I dont think it impacts on the manufacture's profits.

As per D,
I can think two scenarios -- promotion and non promotion, according to D, the total amount of production is the same when promotion as when no promotion
Scenario #1 promotion, -- the manufactures low their price to be \$10 , then result in increase dramtic amount of productions, say 100, then the profit = 10*100 - cost
Scenario #2 non promtion -- the manufactures regular price is 15, the amount of prodctions is 100 as well, then the profit = 12*100 - cost,

so , we can see the profit during promotion is lower than that during non promotion.

Would you please point out my fault?

BTW, can you tell me the link that I can search SC and CR QOTDs ?
I get a link https://gmatclub.com/forum/gmat-question-of-the-day-2017-edition-239951.html from signature of GMATNinja, a one not easy to search,
I also get a link from GMATNinja's reply, https://gmatclub.com/forum/search.php?search_id=tag&tag_id=1196, there are only SC QOTDs and search tag's spectrum does not narrow to the SC list of the link,

Have a nice day
>_~

zoezhuyan, your new interpretation of B sounds good! Yes, this would directly affect retailers. And if retailers are selling less product, then they would buy less product from the manufacturers. So, it would impact manufacturers' profits as well.

As for (D), the profit PER item might be lower, but if the manufacturers are selling much more product, then their overall profits will still be higher. Make sense?
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QOTD: Manufacturers sometimes discount the price of a product  [#permalink]

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27 Mar 2018, 00:58
souvik101990 wrote:

Verbal Question of The Day: Day 228: Critical Reasoning

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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 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.

Every question of the day will be followed by an expert reply by GMATNinja in 12-15 hours. Stay tuned! Post your answers and explanations to earn kudos.

Conclusion: The manufacturers could often make more profit by not holding the promotions.

Any answer choice that shows the negative side of promotions on profits of manufacturer is our answer.

(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. If it is carefully calculated chances of loss is less.

(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. Weakner

(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. Weakner

(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. Correct. if this happens the profit of manufacturer gets affected.

(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. Weakner
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Re: Manufacturers sometimes discount the price of a product to retailers  [#permalink]

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05 Jul 2019, 21:35
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.

The argument is that manufacturers can make more profit by not discounting the price of their products for sale to retailers. The evidence used to argue this point is pretty weak as it doesn't really tie in rogue pieces of info presented in the conclusion. We are told that during such promotions, retailers often "advertise" the products to consumers.

We aren't told whether the discounts are passed onto consumers by retailers and the argument assumes that retailers will continue to buy from manufacturer's whether the manufacturer's products are discounted or not.

A is incorrect as it just tells us how the discount is calculated. This isn't relevant to the argument.
B neither helps nor weakens he argument. It just tells us that if retailers discount their products as well then it would be effective as consumers don't get used to this sale price.
C is incorrect as it does nothing to the argument.
D is correct because it tells us that the retailers stockpile product at this discounted price instead of selling it straight too consumers. This infers the retailers may not necessarily be passing on the discounts to the consumers, so the manufacturer's are losing out on profit that they could have otherwise made.
E is incorrect because it doesn't explain why offering a discount in the first place would lead to lower profits than would selling at the regular price in relation to the scenario presented. E presents an alternate scenario that MAY or MAY NOT reduce the profitability of the manufacturer.
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Re: Manufacturers sometimes discount the price of a product to retailers   [#permalink] 05 Jul 2019, 21:35

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