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12 Nov 2022, 12:23
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The following appeared in a corporate memorandum of a beverage manufacturer:
“Our promotional price reductions on energy drinks have been highly successful, as we have seen a dramatic increase in unit sales. Further, surveys of our consumers indicate that this promotion was favorably received by the majority of our customers. Therefore, to improve our company’s profitability and enhance its perception in the eyes of consumers, similar price reductions should be offered on all drinks produced by our firm.”
Could anyone give me a score? Thank you
The argument claims that the price’s reduction adopted on the beverage of the company have turned out to be successful. In order to reinforce this claim, the company refers to surveys which have proven that the promotion was favorably received by the majority of its consumers. Therefore, the company assumes it should offer similar promotions to improve its profitability and enhance its perceptions in the eyes of consumers. However, the conclusion of the argument relies on assumptions for which there is no clear evidence.
Firstly, the argument readily assumes that the dramatic increase in its product’s sales has happened thanks to the promotion. This statement is a stretch because there is no evident data that leads to think this. The company, before assuming this, should have taken into consideration the fact that an increase in unit sales isn’t necessarily correlated to the promotions applied. Other factors could be the cause of the high degree of purchases such as ads being particularly attractive or the product being sponsored by an influencer.
Secondly, the argument claims that similar prices' reductions may lead to a rise in the profitability of the company. Reducing prices doesn’t always turns out as the best way to obtain more revenues. In order to do so the company should necessarily give a look at its business budget. This way they can find out whether there is enough liquidity to cover the price reductions or not. Since the company doesn’t know if the amount of product acquired by the consumers will increase with other price reductions, the company has to assure itself from liquidity loss.
Furthermore, the author goes on by assessing that sale will increase the company’s palatability in the eyes of its clients. If the argument had provided the evidence that this could happen, then the argument would have been a lot more convincing. However, the argument makes a weak statement. It doesn’t take into consideration that prices reduction, at the same time, could be seen as a minor capacity of the enterprise to sell its products and consequently as a way of coping with this issue.
In conclusion, the argument is flawed for the above-mentioned reasons and is therefore unconvincing. It could be considerably strengthened if the company had done proper surveys and had stated to have given a look at its budget and therefore being able to handle promotional prices on its products. Without these information, the argument remains unsubstantiated and open to debate.
“Our promotional price reductions on energy drinks have been highly successful, as we have seen a dramatic increase in unit sales. Further, surveys of our consumers indicate that this promotion was favorably received by the majority of our customers. Therefore, to improve our company’s profitability and enhance its perception in the eyes of consumers, similar price reductions should be offered on all drinks produced by our firm.”
Could anyone give me a score? Thank you
The argument claims that the price’s reduction adopted on the beverage of the company have turned out to be successful. In order to reinforce this claim, the company refers to surveys which have proven that the promotion was favorably received by the majority of its consumers. Therefore, the company assumes it should offer similar promotions to improve its profitability and enhance its perceptions in the eyes of consumers. However, the conclusion of the argument relies on assumptions for which there is no clear evidence.
Firstly, the argument readily assumes that the dramatic increase in its product’s sales has happened thanks to the promotion. This statement is a stretch because there is no evident data that leads to think this. The company, before assuming this, should have taken into consideration the fact that an increase in unit sales isn’t necessarily correlated to the promotions applied. Other factors could be the cause of the high degree of purchases such as ads being particularly attractive or the product being sponsored by an influencer.
Secondly, the argument claims that similar prices' reductions may lead to a rise in the profitability of the company. Reducing prices doesn’t always turns out as the best way to obtain more revenues. In order to do so the company should necessarily give a look at its business budget. This way they can find out whether there is enough liquidity to cover the price reductions or not. Since the company doesn’t know if the amount of product acquired by the consumers will increase with other price reductions, the company has to assure itself from liquidity loss.
Furthermore, the author goes on by assessing that sale will increase the company’s palatability in the eyes of its clients. If the argument had provided the evidence that this could happen, then the argument would have been a lot more convincing. However, the argument makes a weak statement. It doesn’t take into consideration that prices reduction, at the same time, could be seen as a minor capacity of the enterprise to sell its products and consequently as a way of coping with this issue.
In conclusion, the argument is flawed for the above-mentioned reasons and is therefore unconvincing. It could be considerably strengthened if the company had done proper surveys and had stated to have given a look at its budget and therefore being able to handle promotional prices on its products. Without these information, the argument remains unsubstantiated and open to debate.
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