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The author suggests that an investment firm should transfer its investments from Cola Loca to Early Bird Coffee citing evidence that average coffee drinker's consumption of coffee increases with age while the trend is reversed in case of cola. The author further states that even after age 60, coffee consumption remains high and this trend has remained stable for the past 40 years. Extrapolating on the fact that number of older adults will significantly increase as the population ages over the next 20 years, the author infers that demand for coffee will increase while the demand for cola will decrease and arrives at his final conclusion. While the argument does look sound, there are some aspects the author has failed to notice.
Firstly, the author has not discussed about how the population and its composition might change over the next 20 years. A higher birth rate might cause the proportion of older adults to remain constant or even decrease. Thus, extending the author's reasoning, cola demand will be higher than coffee in that case. Similarly, the average life expectancy is not discussed anywhere by the author. For instance, if the said country has a life expectancy of early 40s, then demand for cola can be and stay higher.
Secondly, the author has not talked about how reliable are past trends in determining future consumer behaviour. If cola gains popularity suddenly and coffee loses its popularity due to some other reason, then past data is just data. In other words, consumer behaviour is influenced by a range of factors like affordability, accessibility, marketing, offers, discounts , so on and so forth. The author can cite evidence relating to what motivates a person of certain age (or people of certain age group) to choose cola or coffee. This can throw more light into this aspect of the argument.
Finally, the author assumes that business like Cola Loca and Early Bird Coffee will only sell beverages they specialize upon or known for. Businesses constantly monitor consumer behaviour and market trends, and constantly evolve by charting out new strategies. Further, businesses will always be looking to break into new customer segments in order to be in the market and build reputation. Thus, they might have different products for different customer segments. The author has cited nothing about the range of products these 2 companies offer. Also, there is no information about the market share, reputation and growth potential of each of these companies in order to properly evaluate if the investment firm should invest in any of these 2 companies or go for another company.
Therefore, even though the author rightly uses average consumer's consumptions to correlate with his/her age, there are other aspects of the argument the author should address in order to make a more pressing and convincing plan to the investment and financial consulting firm.
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