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Over the past five years, the price gap between name-brand

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Manager
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Over the past five years, the price gap between name-brand  [#permalink]

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30 Jun 2009, 23:59
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Over the past five years, the price gap between name-brand cereals and less expensive store-brand cereals has become so wide that consumers have been switching increasingly to store brands despite the name brands’ reputation for better quality. To attract these consumers back, several manufacturers of name-brand cereals plan to narrow the price gap between their cereals and store brands to less than what it was five years ago.

Which of the following, if true, most seriously calls into question the likelihood that the manufacturers’ plan will succeed in attracting back a large percentage of consumers who have switched to store brands?

(A) There is no significant difference among manufacturers of name-brand cereals in the prices they charge for their products.

(B) Consumers who have switched to store-brand cereals have generally been satisfied with the quality of those cereals.

(C) Many consumers would never think of switching to store-brand cereals because they believe the name brand cereals to be of better quality.

(D) Because of lower advertising costs, stores are able to offer their own brands of cereals at significantly lower prices than those charged for name-brand cereals.

(E) Total annual sales of cereals—including both name-brand and store-brand cereals—have not increased significantly over the past five years.
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Re: Over the past five years, the price gap between name-brand  [#permalink]

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15 Jul 2009, 23:52
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yup B.
notice the phrases "to narrow the price gap" and "switching increasingly to store brands despite the name brands’ reputation for better quality".

This implies:
=> price difference will still be there and name brands' cereals will be 'slightly' costlier
=> the only and the most significant difference between the two types is quality.

Hence:
=>the only important factor to think about switching will be quality.

So, if customers are already satisfied with quality then there is no value-addition in switching to name brands.
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Manager
Joined: 17 Apr 2009
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Re: Over the past five years, the price gap between name-brand  [#permalink]

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15 Jul 2009, 05:50
B looks like the ans.

Because if people are satisfied with the store-brand cereals then there is no reason for them to shift to other brands.Thus any efforts on the part of name-brand cereals manufacturers will go waste.
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Re: Over the past five years, the price gap between name-brand  [#permalink]

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13 May 2010, 13:30
Yeah. Only B makes sense. D is a boobie trap but it has no substance. It doesn't reduce the likelihood of people switching back but if they're satisfied and it's cheaper then why change back?
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Over the past five years, the price gap between name-brand  [#permalink]

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24 Oct 2012, 05:40
Over the past five years, the price gap between name-brand cereals and less expensive store-brand cereals has become so wide that consumers have been switching increasingly to store brands despite the name brands’ reputation for better quality. To attract these consumers back, several manufacturers of name-brand cereals plan to narrow the price gap between their cereals and store brands to less than what it was five years ago.

Which of the following, if true, most seriously calls into question the likelihood that the manufacturers’ plan will succeed in attracting back a large percentage of consumers who have switched to store brands?

(A) There is no significant difference among manufacturers of name-brand cereals in the prices they charge for their products.

(B) Consumers who have switched to store-brand cereals have generally been satisfied with the quality of those cereals.

(C) Many consumers would never think of switching to store-brand cereals because they believe the name brand cereals to be of better quality.

(D) Because of lower advertising costs, stores are able to offer their own brands of cereals at significantly lower prices than those charged for name-brand cereals.

(E) Total annual sales of cereals—including both name-brand and store-brand cereals—have not increased significantly over the past five years.
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Re: Over the past five years, the price gap between name-brand  [#permalink]

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24 Oct 2012, 06:03
Jp27 wrote:
Over the past five years, the price gap between name-brand cereals and less expensive store-brand cereals has become so wide that consumers have been switching increasingly to store brands despite the name brands’ reputation for better quality. To attract these consumers back, several manufacturers of name-brand cereals plan to narrow the price gap between their cereals and store brands to less than what it was five years ago.

Which of the following, if true, most seriously calls into question the likelihood that the manufacturers’ plan will succeed in attracting back a large percentage of consumers who have switched to store brands?

A. There is no significant difference among manufacturers of name-brand cereals in the prices they charge for their products.
B. Consumers who have switched to store-brand cereals have generally been satisfied with the quality of those cereals.
C. Many consumers would never think of switching to store-brand cereals because they believe the name brand cereals to be of better quality.
D. Because of lower advertising costs, stores are able to offer their own brands of cereals at significantly lower prices than those charged for name-brand cereals.
E. Total annual sales of cereals—including both name-brand and store-brand cereals—have not increased significantly over the past five years.

OA after some discussion....

CDE can be eliminated. None of these has anything to do with the conclusion/argument. Its between A & B.
IMO B. Only B gives us some reason to make the plan less successful.
A seems to contradict with the First premise of the argument.

Hence B.
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Re: Over the past five years, the price gap between name-brand  [#permalink]

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24 Oct 2012, 09:41
I think its straight B.
Nothing is said about the quality of store brand cereals in the argument. Hence its the spot where the option should strike so as to weaken.
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Re: Over the past five years, the price gap between name-brand  [#permalink]

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24 Oct 2012, 10:50
I thought the correct choice is B, the consumers are too familiar with their consumption habits. So, changing habit is very challenges.
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Re: Over the past five years, the price gap between name-brand  [#permalink]

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24 Oct 2012, 10:53
People were willing to pay a slightly higher price for name brand cereal because they thought that the store brand cereals were of poor quality. If they now feel that store brand cereals are of satisfactory quality, they might nit be willing to pay higher prices even if the difference is small.

Kudos Please... If you liked my post.
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Re: Over the past five years, the price gap between name-brand  [#permalink]

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06 Sep 2014, 01:02
9. Over the past five years, the price gap between name-brand cereals and less expensive store-brand cereals has become so wide that consumers have been switching increasingly to store brands despite the name brands’ reputation for better quality. To attract these consumers back, several manufacturers of name-brand cereals plan to narrow the price gap between their cereals and store brands to less than what it was five years ago.

Which of the following, if true, most seriously calls into question the likelihood that the manufacturers’ plan will succeed in attracting back a large percentage of consumers who have switched to store brands?

A. There is no significant difference among manufacturers of name-brand cereals in the prices they charge for their products. - OFS as we are not bothered about the prices charged among the name brand cereals.

B. Consumers who have switched to store-brand cereals have generally been satisfied with the quality of those cereals - The customers are already satisfied with the quality of the cereals and they will not come back even if the difference of the price is narrowed - Correct

C. Many consumers would never think of switching to store-brand cereals because they believe the name brand cereals to be of better quality - This is OFS as we are talking about other set of customers

D. Because of lower advertising costs, stores are able to offer their own brands of cereals at significantly lower prices than those charged for name-brand cereals - OFS

E. Total annual sales of cereals—including both name-brand and store-brand cereals—have not increased significantly over the past five years - OFS we are not bothered about the sales
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Re: Over the past five years, the price gap between name-brand  [#permalink]

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08 Aug 2019, 07:59
Customer can switch back for two reasons- price and quality.
Name brands are narrowing the price gap by reducing their prices with same quality.
Now according to option D, store brand charge significantly lower price than that is charged by name brands. But if quality of store brand decreases drastically, then customer can switch to name brand.
Now option B tell that customers are satisfied with quality of product. So the plan of reducing the prices of name brand product is not going to attract customer back.
B is winning choice.
Re: Over the past five years, the price gap between name-brand   [#permalink] 08 Aug 2019, 07:59
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