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

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

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17 Dec 2005, 11:40
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100% (00:00) correct 0% (00:00) wrong based on 1 sessions

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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 brandsâ€™ 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 manufacturersâ€™ 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 cerealsâ€”including both name-brand and store-brand cerealsâ€”have not increased significantly over the past five years.
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VP
Joined: 06 Jun 2004
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17 Dec 2005, 12:57
This is a clear B

If consumers generally perceive the store brands to be inferior of quality, and are satisified after the switch, they are less likely to switch back to the name brands just because the price gap has lessened.

Notice its the price gap....name brand cereals still cost more than store brands do.

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Senior Manager
Joined: 03 Nov 2005
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17 Dec 2005, 22:17
B. If consumers are actually more than satisfied with the quality of less expensive store-brand cereal, reduction in the price of higher-priced cereals probably won't make them change their mind.
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Director
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18 Dec 2005, 07:52
Yes, B is the only answer choice that makes a bit sense.

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SVP
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19 Dec 2005, 04:25
very good job. OA is indeed B.
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SVP
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19 Dec 2005, 09:56
B. Satisfactory quality and lower price. Go local.

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19 Dec 2005, 09:56
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