Products sold under a brand name used to command premium : GMAT Critical Reasoning (CR)
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Products sold under a brand name used to command premium

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02 Mar 2010, 10:45
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Products sold under a brand name used to command premium prices because, in general, they were superior to
nonbrand rival products. Technical expertise in product development has become so widespread, however, that
special quality advantages are very hard to obtain these days and even harder to maintain. As a consequence,
brand-name products generally neither offer higher quality nor sell at higher prices. Paradoxically, brand names
are a bigger marketing advantage than ever.

Which of the following, if true, most helps to resolve the paradox outlined above?

(A) Brand names are taken by consumers as a guarantee of getting a product as good as the best rival
products.
(B) Consumers recognize that the quality of products sold under invariant brand names can drift over time.
(C) In many acquisitions of one corporation by another, the acquiring corporation is interested more in
acquiring the right to use certain brand names than in acquiring existing production facilities.
(D) In the days when special quality advantages were easier to obtain than they are now, it was also easier to
get new brand names established.
(E) The advertising of a company’s brand-name products is at times transferred to a new advertising agency,
especially when sales are declining.

I answered D but it is incorrect- D states that it was easier to get brand names established. What it means is that today is it difficult to establish a brand name. I believe that explains the paradox as even though good quality products can be made by any one it is difficult to create a brand name and for those who have created it- they have a marketing edge and that is what the question is asking.Can someone tell me whats wrong with this logic
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20 Jan 2013, 18:55
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zest4mba wrote:
Products sold under a brand name used to command premium prices because, in general, they were superior to
nonbrand rival products. Technical expertise in product development has become so widespread, however, that
special quality advantages are very hard to obtain these days and even harder to maintain. As a consequence,
brand-name products generally neither offer higher quality nor sell at higher prices. Paradoxically, brand names
are a bigger marketing advantage than ever.

Which of the following, if true, most helps to resolve the paradox outlined above?

(A) Brand names are taken by consumers as a guarantee of getting a product as good as the best rival
products.
(B) Consumers recognize that the quality of products sold under invariant brand names can drift over time.
(C) In many acquisitions of one corporation by another, the acquiring corporation is interested more in
acquiring the right to use certain brand names than in acquiring existing production facilities.
(D) In the days when special quality advantages were easier to obtain than they are now, it was also easier to
get new brand names established.
(E) The advertising of a company’s brand-name products is at times transferred to a new advertising agency,
especially when sales are declining.

I answered D but it is incorrect- D states that it was easier to get brand names established. What it means is that today is it difficult to establish a brand name. I believe that explains the paradox as even though good quality products can be made by any one it is difficult to create a brand name and for those who have created it- they have a marketing edge and that is what the question is asking.Can someone tell me whats wrong with this logic

This question is quite interesting and difficult at the same time. The problem some of us have encountered in selecting option D is that we have used our common but outside knowledge. The knowledge is that a branded product has an advantage over a non-branded product. But the main question relevant to this passage is how? How does a branded product has an advantage over a non-branded product?

Think like a Company

Before answering this "how", please understand that we are thinking of this advantage in terms of the company because the last line clearly says that "brand names are a bigger marketing advantage than ever.". This marketing advantage cannot be used for the consumers, it is for the company who owns the product.

So, how does a branded product has an advantage over a non-branded product? There could be only two factors: higher price or higher sales. In other words, the product could generate greater profits per unit or sell more units. In either way, the company would be at an advantage.

In our current case, it is given that the product doesn't sell at a higher price but still it given a marketing advantage. So, now the other way of giving advantage is through increased sales.

So, if an option statement suggests that people will buy branded products more than unbranded products, that would resolve the paradox - The paradox is that even though the branded products don't offer higher price, they are still a marketing advantage

Guaranteed Quality at the same price

Now, as we go through the options, we see that option A provides a very valid reason to suggest that branded products will sell more than unbranded products. Why? Because at the same price, you are getting a guarantee of quality if you buy a branded product.

Therefore, option A is the correct choice.

However, let's also look at option D.

This basically says that brand names are difficult to get established now. But it doesn't say that how these brand names are a marketing advantage even though they don't allow us to charge higher. Here, some of us have used our common knowledge that brand names are an advantage in all situations. But we can't use this common knowledge here.

Hope this helps

Feel free to ask in case of further queries.

-Chiranjeev
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19 Dec 2012, 20:22
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The OA is A.

I chose B initially. But after reviewing the Q and A, here is why I think the answer is A:

The paradox is is why do brands have an advantage over non-brands, considering that manufacturing and quality is relatively the same across the industry. Brands should not have an advantage, but they still do. Why?

So there must be something else that is driving the use of marketing among brands.

Possible considerations-Maybe the consumer responds prefers brand that guarantee performance? Or maybe the marketing advantage that firms have provides those firms with the ability to differntiate themselves from their competition?

A addresses the use of marketing, whereas B describes the behavior of consumers. If you think about it, B makes the problem worse-if the consumer already thinks that the non-brand will degrade over time, then what is the difference between now and before the new manufacturing techniques were employed? This seems to indicate that the firm has alwayes had a marketing advantage, and it does not explain why there may be a greater advantage right now.

Those are my thoughts anyway...

A is by no means a sexy answer but, at least is explains why the brands have a greater marketing advantage despite less differentiation among the products.
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20 Jan 2013, 06:46
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Hi Jack,

Let me see if I can explain.

The question simply is:
Branded Products are the same price and quality as non-branded.
BUT
Branded products are at a bigger marketing advantage than ever.
WHY?

To put D in easy to understand language, it is saying: It is now harder to get a brand name established.

This does not say anything about why branded products, whilst they are the same quality and price are still selected. It simply says that it's harder to create a brand - this is slightly different, it would suggest that branded products are more secure in their superior position (harder to get a rival brand set up), but does not say WHY they are in a superior position.

Does that help
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06 Jan 2014, 09:38
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nverma wrote:
Products sold under a brand name used to command premium prices because, in general, they were superior to
nonbrand rival products. Technical expertise in product development has become so widespread, however, that
special quality advantages are very hard to obtain these days and even harder to maintain. As a consequence,
brand-name products generally neither offer higher quality nor sell at higher prices. Paradoxically, brand names
are a bigger marketing advantage than ever.

Which of the following, if true, most helps to resolve the paradox outlined above?

(A) Brand names are taken by consumers as a guarantee of getting a product as good as the best rival
products. >>>>[b]Correct[/b]
(B) Consumers recognize that the quality of products sold under invariant brand names can drift over time. >>>>Does not resolve the paradox.
(C) In many acquisitions of one corporation by another, the acquiring corporation is interested more in
acquiring the right to use certain brand names than in acquiring existing production facilities.>>>>Does not resolve the paradox.
(D) In the days when special quality advantages were easier to obtain than they are now, it was also easier to
get new brand names established. >>>>If its easy to get a brand name, then anyone can have a brand name, and then having a brand name is not an advantage.
(E) The advertising of a company’s brand-name products is at times transferred to a new advertising agency,
especially when sales are declining.>>>>Does not resolve the paradox.

I answered D but it is incorrect- D states that it was easier to get brand names established. What it means is that today is it difficult to establish a brand name. I believe that explains the paradox as even though good quality products can be made by any one it is difficult to create a brand name and for those who have created it- they have a marketing edge and that is what the question is asking.Can someone tell me whats wrong with this logic
Guys, I seriously need some help on this one. What is wrong with B? If quality of invariant brand names is expected to fade in some time, having a brand name definitely helps.
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The path is long, but self-surrender makes it short; the way is difficult, but perfect trust makes it easy.

Fire the final bullet only when you are constantly hitting the Bull's eye, till then KEEP PRACTICING.
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Getting defeated is just a temporary notion, giving it up is what makes it permanent.

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06 Jan 2014, 11:11
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Hi Josh,

I'm afraid I disagree with your assumption that contradicting the passage can help with paradoxes, at least in this case.

The paradox is that: branded/unbranded are the same and the same price. Yet the brands have an advantage.

You need something to resolve that tension, by giving a 3rd bit of info. Simply saying you don't agree with one or other is not actually resolving the paradox, just saying you disagree with it.

James
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02 Mar 2010, 12:27
just thinking out loud here...the way i picked up the paradox is "...bigger MARKETING advantage than ever...". The paradox, in my opinion, is stressing on the MARKETING advantage of the brand names. Hence it has to do with the impact of brand names on consumers i.e. how brand names (or lack thereof) impact on consumers help market a product.

hence i'll go with option (B) Consumers recognize that the quality of products sold under invariant brand names can drift over time. which tells that brand name still holds some value in consumer's thinking even though there is no special quality associated with brand products.

I guess, the problem with option (D) In the days when special quality advantages were easier to obtain than they are now, it was also easier to get new brand names established is that it talks about the difficulty of creating a brand in modern (today's) world but doesn't relate it to its MARKETING impact.

My 2 cents. Do let me know the correct choice though!
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02 Mar 2010, 12:29
zest4mba wrote:
Products sold under a brand name used to command premium prices because, in general, they were superior to
nonbrand rival products. Technical expertise in product development has become so widespread, however, that
special quality advantages are very hard to obtain these days and even harder to maintain. As a consequence,
brand-name products generally neither offer higher quality nor sell at higher prices. Paradoxically, brand names
are a bigger marketing advantage than ever.

Which of the following, if true, most helps to resolve the paradox outlined above?

(A) Brand names are taken by consumers as a guarantee of getting a product as good as the best rival
products. >>>>[b]Correct[/b]
(B) Consumers recognize that the quality of products sold under invariant brand names can drift over time. >>>>Does not resolve the paradox.
(C) In many acquisitions of one corporation by another, the acquiring corporation is interested more in
acquiring the right to use certain brand names than in acquiring existing production facilities.>>>>Does not resolve the paradox.
(D) In the days when special quality advantages were easier to obtain than they are now, it was also easier to
get new brand names established. >>>>If its easy to get a brand name, then anyone can have a brand name, and then having a brand name is not an advantage.
(E) The advertising of a company’s brand-name products is at times transferred to a new advertising agency,
especially when sales are declining.>>>>Does not resolve the paradox.

I answered D but it is incorrect- D states that it was easier to get brand names established. What it means is that today is it difficult to establish a brand name. I believe that explains the paradox as even though good quality products can be made by any one it is difficult to create a brand name and for those who have created it- they have a marketing edge and that is what the question is asking.Can someone tell me whats wrong with this logic
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02 Mar 2010, 12:38
Thanks for posting the correct option.
So, i guess, even though my selection was wrong but my "marketing - consumer impact" theory may be right!
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02 Mar 2010, 13:40
It seems that the only choice explaining the paradox is A. what is the OA?
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02 Mar 2010, 21:36
I will go with A....

Thanks.
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12 Sep 2011, 08:35
+1 for A..
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20 Jan 2013, 06:25

For me the paradox is that even though the quality of the product is no longer different the Brand still gives now a BETTER competitive advantage. Choice D answers this paradox by saying that, yes the quality is no longer different but this makes now Brand even harder to enter the market and get renowned thus giving the installed brand an even more competitive advantage.

Answer A does not really answer the paradox that Brand now are even more important than before because the argument in A was already true before.
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06 Jan 2014, 10:06
zest4mba wrote:
Products sold under a brand name used to command premium prices because, in general, they were superior to
nonbrand rival products. Technical expertise in product development has become so widespread, however, that
special quality advantages are very hard to obtain these days and even harder to maintain. As a consequence,
brand-name products generally neither offer higher quality nor sell at higher prices. Paradoxically, brand names
are a bigger marketing advantage than ever.

Earlier - Branded Products , were priced at a premium due to perceived superiority to Non Branded Products.

Now - Techncical Expertise has narrowed the gap between branded and Non Branded Products , reducing the product differences.

Concl - Branded Products neither produce higher Quality nor are priced at a premium.

Paradox - Branded Products are bigger marketing tool....

If there is no difference in terms of Product quality , advantages and other aspects between Branded and Non Branded Products then how come Branded Products offer better Marketing Tool....

Which of the following, if true, most helps to resolve the paradox outlined above?

(A) Brand names are taken by consumers as a guarantee of getting a product as good as the best rival
products.

Seems good - We buy Branded goods with the expectation of Quality...

Consider Apple MAC book to Say XYZ Brand...

Even if Technology someday bridges the gap between Apple and XYZ , we would still prefer Apple Product with the gurantee of a good Brand name in terms of Quality and reputation won over time...

(B) Consumers recognize that the quality of products sold under invariant brand names can drift over time.

Not as good as (A)

(C) In many acquisitions of one corporation by another, the acquiring corporation is interested more in acquiring the right to use certain brand names than in acquiring existing production facilities.

Out of scope and wordy...

(D) In the days when special quality advantages were easier to obtain than they are now, it was also easier to get new brand names established.

We are trying to resolve the Paradox , and this statement is no way helpful in doing so...

(E) The advertising of a company’s brand-name products is at times transferred to a new advertising agency, especially when sales are declining.

Out of scope...

Hence IMO (A) looks the best..
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06 Jan 2014, 10:22
joshnsit wrote:
Guys, I seriously need some help on this one. What is wrong with B? If quality of invariant brand names is expected to fade in some time, having a brand name definitely helps.

Hi Josh,

The issue with B, is that it actually goes against what is said in the passage, where it is stated that now non-brand names have come up to the same standard.

So whilst B does give a reason for people choosing branded, it does not over come the paradox, rather stating a different point of view to the author.
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06 Jan 2014, 11:00
plumber250 wrote:
joshnsit wrote:
Guys, I seriously need some help on this one. What is wrong with B? If quality of invariant brand names is expected to fade in some time, having a brand name definitely helps.
Hi Josh
The issue with B, is that it actually goes against what is said in the passage, where it is stated that now non-brand names have come up to the same standard.

So whilst B does give a reason for people choosing branded, it does not over come the paradox, rather stating a different point of view to the author.
James
James, Bingo.. I also thought of this exact line of reasoning but I have 2 reservations in accepting this:
1) I believe that we can definitely bring fresh information in the paradox answer choices, just as we can bring additional information in Strengthen/Weakening answers. So having a new information which can go against one of the facts seems fine to me.
2) The bigger issue is that the information brought by B is from the perspective of non-branded products, so B doesn't refer to or go directly against branded products as in the stimulus. This means I am not directly going against of what I said in stimulus by saying B. Please note that conclusion of argument is: brand-name products generally neither offer higher quality nor sell at higher prices.

Just another observation, A is a perception(from past) and B is also a perception(of future). I couldn't find any way to find A better.

Any suggestions, where I could have gone wrong in assessing this.. Thanks for responding
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The path is long, but self-surrender makes it short; the way is difficult, but perfect trust makes it easy.

Fire the final bullet only when you are constantly hitting the Bull's eye, till then KEEP PRACTICING.
Failure establishes only this, that our determination to succeed was not strong enough.
Getting defeated is just a temporary notion, giving it up is what makes it permanent.

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06 Jan 2014, 13:49
plumber250 wrote:
Hi Josh,
I'm afraid I disagree with your assumption that contradicting the passage can help with paradoxes, at least in this case.

The paradox is that: branded/unbranded are the same and the same price. Yet the brands have an advantage.

You need something to resolve that tension, by giving a 3rd bit of info. Simply saying you don't agree with one or other is not actually resolving the paradox, just saying you disagree with it.

James
Thanks James, I think I understand your point, it makes sense and we all are here to learn. I will keep this rule/learning/observation in mind till I observe a deviation.
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If you know what you're worth, then go out and get what you're worth. But you gotta be willing to take the hits, and not pointing fingers saying you ain't where you wanna be because of anybody! Cowards do that and You're better than that!
The path is long, but self-surrender makes it short; the way is difficult, but perfect trust makes it easy.

Fire the final bullet only when you are constantly hitting the Bull's eye, till then KEEP PRACTICING.
Failure establishes only this, that our determination to succeed was not strong enough.
Getting defeated is just a temporary notion, giving it up is what makes it permanent.

http://gmatclub.com/forum/1000-sc-notes-at-one-place-in-one-document-with-best-of-explanations-192961.html

Press +1 Kudos, if you think my post gave u a tiny tip.

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