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Posts: 16,402
Updated on: 29 Oct 2023, 02:54
Originally posted by Sajjad1994 on 10 Mar 2022, 07:00.
Last edited by BottomJee on 29 Oct 2023, 02:54, edited 2 times in total.
Last edited by BottomJee on 29 Oct 2023, 02:54, edited 2 times in total.
Moved to new forum
Marketers theorize that consumers’ purchase decisions are driven by the perception of value. This perception, often obtained through a cost-benefit analysis, can be manipulated by adding more features or by reducing the price. This is called the expectancy-value model. Let’s see an example.
Jack, who wants to purchase a laptop, has narrowed down his choices to 4 brands of laptop computers (A, B, C, D). He 1s interested in 5 attributes: Processor Performance (PP), Graphics Capability (GC), Size & Weight (SW), Battery life (BL), & Marked Price (MP) and is evaluating the offerings based on the same. Jack puts 30% priority on Processor Performance, 10% on Graphic Capability, and equal priority on Size & Weight, Battery life, and Price. He comes up with a number called Composite Attribute Value that is the weighted average of the performance of a brand’s offering against Jack’s priorities.
Each attribute is rated from 0 to 10, where 10 represents the highest performance.
Jack, who wants to purchase a laptop, has narrowed down his choices to 4 brands of laptop computers (A, B, C, D). He 1s interested in 5 attributes: Processor Performance (PP), Graphics Capability (GC), Size & Weight (SW), Battery life (BL), & Marked Price (MP) and is evaluating the offerings based on the same. Jack puts 30% priority on Processor Performance, 10% on Graphic Capability, and equal priority on Size & Weight, Battery life, and Price. He comes up with a number called Composite Attribute Value that is the weighted average of the performance of a brand’s offering against Jack’s priorities.
Each attribute is rated from 0 to 10, where 10 represents the highest performance.
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
95%
(hard)
Question Stats:
40% (04:47) correct
60%
(03:50)
wrong
based on 577
sessions
History
Date
Time
Result
Not Attempted Yet
1. Consider each of the information given in tabs. Does the information in three tabs support the inference as stated below?
| Yes | No | |
| Composite Attribute Value for Jack is greatest for brand A. | ||
| Jack purchase brand A based on customer value. | ||
| Brand C scores lowest both in terms of customer value and Customer benefit. |
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
15%
(low)
Question Stats:
77% (01:29) correct
23%
(01:30)
wrong
based on 583
sessions
History
Date
Time
Result
Not Attempted Yet
2. Let X denote Customer Value, Y denote Customer Cost, and let Z denote Composite Attribute Value. Which of the following algebraic expressions represents relationship among X, Y & Z?
| \(X=\frac{Y(Z-5)}{5}\) | |
| \(X=\frac{4}{5*Y*Z}\) | |
| \(X=\frac{Y(5-Z)}{5}\) | |
| \(X=\frac{Y}{5(5-Z)}\) | |
| \(X=\frac{YZ-5Z}{5}\) |
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
75%
(hard)
Question Stats:
48% (01:49) correct
52%
(01:38)
wrong
based on 630
sessions
History
Date
Time
Result
Not Attempted Yet
3. If Jack will decide buying laptop based on Customer Value, which of the possible strategies should company C implement so that it becomes Jack’s preferred choice?
| Yes | No | |
| Reduce the marked price to $60. | ||
| Add a faster processor to increases its Processor Performance rating to 9. | ||
| Improve its graphics capability to the highest possible ranking. |
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Given - Jack, who wants to purchase a laptop, has narrowed down his choices to 4 brands of laptop computers (A, B, C, D). He 1s interested in 5 attributes: Processor Performance (PP), Graphics Capability (GC), Size & Weight (SW), Battery life (BL), & Marked Price (MP) and is evaluating the offerings based on the same. Jack puts 30% priority on Processor Performance, 10% on Graphic Capability, and equal priority on Size & Weight, Battery life, and Price. He comes up with a number called Composite Attribute Value that is the weighted average of the performance of a brand’s offering against Jack’s priorities.
Lets create a table using the priority as he given.
Brand PP GC SW BL MP applying priority --> PP(30%) GC(10%) SW(20%) BL(20%) MP(20%) CCAV
A 8 6 4 4 8 -------------------> 2.4 0.6 0.8 0.8 1.6 6.2
B 6 9 6 4 6 -------------------> 1.8 0.9 1.2 0.8 1.2 5.9
C 5 4 9 7 4 -------------------> 1.5 0.4 1.8 1.4 0.8 5.9
D 7 8 4 6 7 -------------------> 2.1 0.8 0.8 1.2 1.4 6.3
Hence,
1. Composite Attribute Value for Jack is greatest for brand A. --- No. (Highest value is for brand D)
2. Jack purchase brand A based on customer value.
For this lets calculate Customer value for each brand,
But before that we need to calculate CB - Customer benefit = CC * CCAV / 5
CBforA = CCforA * CCAV / 5 = 150*6.2 / 5 = 186
Similarly CBforB = 139*5.9/5 = 164.02, CBforC = 127*5.9/5 = 149.86 and CBforD = 122*6.3/5 = 153.72
From this we will calculate Customer value
CVforA = CBforA - CCforA = 186 - 150 = 36
CVforB = CBforB - CCforB = 164.02 - 139 = 25.02
CVforC = CBforC - CCforC = 149.86 - 127 = 22.86
CVforD = CBforD - CCforD = 153.72 - 122 = 31.72
As CV is high for A Therefore, Jack purchase brand A based on customer value - Yes.
3. Brand C scores lowest both in terms of customer value and Customer benefit. - Yes
4. Let X denote Customer Value, Y denote Customer Cost, and let Z denote Composite Attribute Value. Which of the following algebraic expressions represents relationship among X, Y & Z
This one was straight forward Option A - X = (Y*Z/5) - Y = Y*(Z/5 - 1)
X = Y*((Z-5)/5)
5. If Jack will decide buying laptop based on Customer Value, which of the possible strategies should company C implement so that it becomes Jack’s preferred choice?
For this we will need some observation check
i. Reduce the marked price to $60. - This doesn't going to impact on Customer Value it will still remain same. Hence No.
ii. Add a faster processor to increases its Processor Performance rating to 9. - This will impact on CCAV, Value will increase by +1.2 also, it will increase value of CV. Hence Yes.
iii. Improve its graphics capability to the highest possible ranking. - Maximum possible ranking is 10 this will impact on CCAV, Value will increase by +0.6 also, it will increase value of CV. Hence Yes.
Lets create a table using the priority as he given.
Brand PP GC SW BL MP applying priority --> PP(30%) GC(10%) SW(20%) BL(20%) MP(20%) CCAV
A 8 6 4 4 8 -------------------> 2.4 0.6 0.8 0.8 1.6 6.2
B 6 9 6 4 6 -------------------> 1.8 0.9 1.2 0.8 1.2 5.9
C 5 4 9 7 4 -------------------> 1.5 0.4 1.8 1.4 0.8 5.9
D 7 8 4 6 7 -------------------> 2.1 0.8 0.8 1.2 1.4 6.3
Hence,
1. Composite Attribute Value for Jack is greatest for brand A. --- No. (Highest value is for brand D)
2. Jack purchase brand A based on customer value.
For this lets calculate Customer value for each brand,
But before that we need to calculate CB - Customer benefit = CC * CCAV / 5
CBforA = CCforA * CCAV / 5 = 150*6.2 / 5 = 186
Similarly CBforB = 139*5.9/5 = 164.02, CBforC = 127*5.9/5 = 149.86 and CBforD = 122*6.3/5 = 153.72
From this we will calculate Customer value
CVforA = CBforA - CCforA = 186 - 150 = 36
CVforB = CBforB - CCforB = 164.02 - 139 = 25.02
CVforC = CBforC - CCforC = 149.86 - 127 = 22.86
CVforD = CBforD - CCforD = 153.72 - 122 = 31.72
As CV is high for A Therefore, Jack purchase brand A based on customer value - Yes.
3. Brand C scores lowest both in terms of customer value and Customer benefit. - Yes
4. Let X denote Customer Value, Y denote Customer Cost, and let Z denote Composite Attribute Value. Which of the following algebraic expressions represents relationship among X, Y & Z
This one was straight forward Option A - X = (Y*Z/5) - Y = Y*(Z/5 - 1)
X = Y*((Z-5)/5)
5. If Jack will decide buying laptop based on Customer Value, which of the possible strategies should company C implement so that it becomes Jack’s preferred choice?
For this we will need some observation check
i. Reduce the marked price to $60. - This doesn't going to impact on Customer Value it will still remain same. Hence No.
ii. Add a faster processor to increases its Processor Performance rating to 9. - This will impact on CCAV, Value will increase by +1.2 also, it will increase value of CV. Hence Yes.
iii. Improve its graphics capability to the highest possible ranking. - Maximum possible ranking is 10 this will impact on CCAV, Value will increase by +0.6 also, it will increase value of CV. Hence Yes.
Posts: 30
I think the first question itself serves as a hint that certain calculations are necessary to answer questions quickly:
Spending a few minutes to construct the table is essential:
A) From the First tab, we can compute the Composite Attribute Value for each of the Brands:
Composite Attribute Value (CAV)= [(Weight of Attribute 1*Ranking of Attribute 1)+(Weight of Attribute 2*Ranking of Attribute 2)+(Weight of Attribute 3*Ranking of Attribute 3)+(Weight of Attribute 4*Ranking of Attribute 4)+(Weight of Attribute 5*Ranking of Attribute 5)]/Total Weight
Note: The total weight (here) would be 1 (0.3+0.1+0.2+0.2+0.2)
B) We can calculate the Customer Benefit and Customer Value using the following formulas
Customer Benefit= Customer Cost* CAV/5 (per the second tab)
Customer Value= Customer Benefit- Customer Cost (per the second tab)
Now, I believe the questions should be a breeze to answer.
GMAT-Club-Forum-xkb988ks.png [ 19.88 KiB | Viewed 3338 times ]
GMAT-Club-Forum-6lvw2p25.png [ 8.08 KiB | Viewed 3318 times ]
Spending a few minutes to construct the table is essential:
A) From the First tab, we can compute the Composite Attribute Value for each of the Brands:
Composite Attribute Value (CAV)= [(Weight of Attribute 1*Ranking of Attribute 1)+(Weight of Attribute 2*Ranking of Attribute 2)+(Weight of Attribute 3*Ranking of Attribute 3)+(Weight of Attribute 4*Ranking of Attribute 4)+(Weight of Attribute 5*Ranking of Attribute 5)]/Total Weight
Note: The total weight (here) would be 1 (0.3+0.1+0.2+0.2+0.2)
B) We can calculate the Customer Benefit and Customer Value using the following formulas
Customer Benefit= Customer Cost* CAV/5 (per the second tab)
Customer Value= Customer Benefit- Customer Cost (per the second tab)
Now, I believe the questions should be a breeze to answer.
Attachment:
GMAT-Club-Forum-xkb988ks.png [ 19.88 KiB | Viewed 3338 times ]
Attachment:
GMAT-Club-Forum-6lvw2p25.png [ 8.08 KiB | Viewed 3318 times ]
Why will reducing $60 not impact? customer value is calculated by subtracting customer benefit from customercost
hence if MP is reduced to 60 from 80, customer cost will reduce, inturn, increasing the customer value.
someone pls tell where am i going wrong
hence if MP is reduced to 60 from 80, customer cost will reduce, inturn, increasing the customer value.
someone pls tell where am i going wrong
Purnank
Posts: 30
PMehta - Reduced the Marked Price to $60 will have the following impact:
1. CAV- 5.9 (No Change)
2. Customer Cost- 60+20+11+3+4+9= 107 (Reduced from $127 to $107)
3. (New) Customer Benefit- 107*5.9/5= 126.26
4. (New) Customer Value- 126.26 - 107= 19.26 (Reduced from $22.86 to $19.26)
Note: The Customer value for A, B, and D remains the same as calculated previously.
Therefore, even after the change in Market Price, Product C is the least preferable.
The answer is No
1. CAV- 5.9 (No Change)
2. Customer Cost- 60+20+11+3+4+9= 107 (Reduced from $127 to $107)
3. (New) Customer Benefit- 107*5.9/5= 126.26
4. (New) Customer Value- 126.26 - 107= 19.26 (Reduced from $22.86 to $19.26)
Note: The Customer value for A, B, and D remains the same as calculated previously.
Therefore, even after the change in Market Price, Product C is the least preferable.
The answer is No
PMehta
Refer to equation of 'X' is multiple of customer cost 'Y' if we reduce marked price to 60 means we are reducing customer cost means we are directly reducing Customer value Hence No impact.
Schools: WHU MBA'25 (S)
Posts: 8
How is one supposed to solve this question in 6 minutes ( assuming 2 mins per question)
Posts: 108
But in the Question it is said that the ratings given are weighted rating themselves then why we need to calculate it again? It should have mentioned just 'rating' what is the purpose of term 'weighted rating' then?
Purnank
mkeshri185
The numbers in the table (like 8, 6, 4, etc.) are raw performance scores, not yet weighted. “Weighted average” means those scores must still be multiplied by Jack’s stated priorities (30%, 10%, and 20% each for the others) to reflect how much importance he gives each attribute.
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Posts: 9
This is extremely calculation-intensive. Solving this ate up almost 10 minutes, averaging >3 min per question. Is there an accurate, reliable way to estimate the answers? If not, what is the ideal strategy to tackle such questions on the GMAT?
LessGoRahul
Joined: 17 Aug 2026
Last visit: 01 Sep 2026
Posts: 34
Location: India
Concentration: Technology, Strategy
Schools: ESSEC MiM '27 HEC MiM '27 MiM '27
GMAT Focus 1: 605 Q82 V79 DI79 
GPA: 7.33
WE:Engineering (Retail: E-commerce)
Your confusion is completely understandable. The key issue is that the question's definition of Customer Benefit (CB) also depends on Customer Cost (CC).
You are thinking:
But here:
CB=5CC×CCAV
and
CV=CB−CC
So when you reduce the marked price, both CB and CC decrease together.
You are thinking:
Quote:
That would be true if Customer Benefit stayed constant.
But here:
CB=5CC×CCAV
and
CV=CB−CC
So when you reduce the marked price, both CB and CC decrease together.
PMehta
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