The following appeared in a memorandum from the development director of the Largo Piano Company:
“The Largo Piano Company has long been known for producing carefully handcrafted, expensive pianos used by leading concert pianists. During the past few years, however, our revenues have declined; meanwhile, the Allegro Musical Instrument Company introduced a line of inexpensive digital pianos and then saw its revenues increase. In order to increase Largo’s sales and in fact outsell Allegro, we should introduce a line of digital pianos in a variety of price ranges. Our digital pianos would be likely to find instant acceptance with customers, since they would be associated with the prestigious Largo name.”
Discuss how well reasoned . . . etc.
The argument concludes that Largo Piano Company should introduce a line of digital pianos in a variety of price ranges to increase their sales and outsell Allegro. To support this conclusion, the argument claims that while Largo's revenues have declined over the past few years, Allegro's has increased as it has introduced a line of inexpensive digital pianos. Stated in this way, the argument fails to consider several key factors on the basis of which it could be evaluated. The conclusion of the argument relies on assumptions for which there is no clear evidence. Hence, the argument is unconvincing and has several flaws.
First, the argument readily assumes that Largo's revenues would also increase in a similar way by following Allegro's model of selling digital pianos. This statement is a stretch and not substantiated in any way. For instance, it is not clear how much the revenue has increased for Allegro Musical Instrument Company and how much the revenue would increase for Largo by following a similar strategy. While the profits might be low for Allegro, their sales numbers might be high enough to increase overall revenues to make inexpensive digital pianos a profitable venture for Allegro. If the profit margin and expected sales volume does not justify Largo's venture into inexpensive digital pianos, the argument is weakened. The argument could have been much clearer if it explicitly stated the expected profit margins for Largo by selling digital pianos.
Second, the argument claims that Largo's digital pianos would likely find instant acceptance with customers, since they would be associated with the prestigious Largo name. This is again a very weak statement as the argument does not demonstrate any correlation between acceptance by customers of inexpensive digital pianos and the expensive pianos and the prestigious name that Largo is known for. To illustrate, customers might feel that Largo has lost its prestigious name when they start associating it with inexpensive digital pianos. Also, genuine musicians who are interested in buying expensive pianos, might purchase a piano from another company that retains its prestigious name. Thus, Largo's proposed strategy might reduce their existing sales and customers of the expensive, handcrafted pianos for which they are known. If the argument had provided evidence that selling inexpensive digital pianos would not affect the prestigious reputation of Largo Piano Company, then the argument would have been a lot more convincing.
Finally, has the development director considered selling digital pianos of only premium and expensive category so as to still retain the prestigious Largo name? Also, has the Largo Piano Company considered selling inexpensive digital pianos under a subsidiary brand name so that the reputation of Largo as a company that sells carefully handcrated, expensive pianos is unaffected? Without convincing answers to these questions, one if left with an impression that the claim is more wishful thinking than substantive evidence.
In conclusion, the argument is weak and unconvincing because of the above-mentioned reasons. It could be considerably strengthened if the author had mentioned all the relevant factors, such as expected profit margins from inexpensive digital pianos, potential effect on reputation of Largo Company, and increasing revenues by diversifying in to premium, expensive digital pianos. In order to assess the merits of the claim that Largo Piano Company should introduce a line of digital pianos in a variety of price ranges, it is essential to have full knowledge of all contributing factors. Without this information, the argument remains unsubstantiated and open to debate.