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# The perceived value of goods and services, rather than just

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Joined: 01 Sep 2010
Posts: 3483
The perceived value of goods and services, rather than just [#permalink]

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20 Apr 2013, 10:17
3
KUDOS
4
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45% (medium)

Question Stats:

66% (01:21) correct 34% (01:17) wrong based on 595 sessions

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The perceived value of goods and services, rather than just their price, is becoming an
increasingly prominent factor in the purchase decisions of modern consumers, a new report has
indicated. Thus it can be concluded that consumers will be increasingly willing to spend extra on
goods and services that are high-quality and durable.

For the above statements to be true, which of the following must be true?

(A) The price of a product plays no role in the making of purchase decisions by modern
consumers
(B) There is a positive relation between the quality of a product and its durability
(C) The modern consumer is not likely to allow the quality of a product to determine his
purchase decision
(D) The ideal way for manufacturers to charge more for their products is to increase the
perceived value of their products in the minds of the modern consumer
(E) The durability of a product is in some way related to its perceived value in the minds of
modern consumers
[Reveal] Spoiler: OA

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Joined: 10 Mar 2013
Posts: 132
Re: The perceived value of goods and services, rather than just [#permalink]

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20 Apr 2013, 10:32
1
KUDOS
E is the one that suits best
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Joined: 15 Jun 2012
Posts: 1124
Location: United States
Re: The perceived value of goods and services, rather than just [#permalink]

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20 Apr 2013, 13:50
2
KUDOS
carcass wrote:
The perceived value of goods and services, rather than just their price, is becoming an
increasingly prominent factor in the purchase decisions of modern consumers, a new report has
indicated. Thus it can be concluded that consumers will be increasingly willing to spend extra on
goods and services that are high-quality and durable.

For the above statements to be true, which of the following must be true?

(A) The price of a product plays no role in the making of purchase decisions by modern
consumers
(B) There is a positive relation between the quality of a product and its durability
(C) The modern consumer is not likely to allow the quality of a product to determine his
purchase decision
(D) The ideal way for manufacturers to charge more for their products is to increase the
perceived value of their products in the minds of the modern consumer
(E) The durability of a product is in some way related to its perceived value in the minds of
modern consumers

IMO, E is correct.

Premise: The perceived value of goods and services, rather than just their price, is becoming an increasingly prominent factor in the purchase decisions
Conclusion: consumers will be increasingly willing to spend extra on goods and services that are high-quality and durable

Combine premise and conclusion: high quality and durable good and services = perceived value in the mind of modern consumers.
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Re: The perceived value of goods and services, rather than just [#permalink]

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20 Apr 2013, 15:26
OA added . Thanks for discussion
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Re: The perceived value of goods and services, rather than just [#permalink]

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21 Apr 2013, 14:10
I'd like to believe E is the answer, but in my experience perceived value can easily be associated with effective marketing, and in fact consumers are often unaware of decreases in quality that are used to increase profit margins. Reductions in the amount of product (peanut butter, for example) by altering the size of a jar, using inferior materials, or using a material that is perceived to be of high quality (because of expectations of durability) but which actually is less durable. Oak trim in construction is perceived to be a high quality material even if it is marginal in its construction (3/8" thick and 3 and 1/2" tall verses 5/8" thick and 6" tall). While perception is an individual construct, perceived value is often the result of a collective cultural expectation. That is, we learn to accept values.
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Re: The perceived value of goods and services, rather than just [#permalink]

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21 Apr 2013, 15:42
SRichard wrote:
I'd like to believe E is the answer, but in my experience perceived value can easily be associated with effective marketing, and in fact consumers are often unaware of decreases in quality that are used to increase profit margins. Reductions in the amount of product (peanut butter, for example) by altering the size of a jar, using inferior materials, or using a material that is perceived to be of high quality (because of expectations of durability) but which actually is less durable. Oak trim in construction is perceived to be a high quality material even if it is marginal in its construction (3/8" thick and 3 and 1/2" tall verses 5/8" thick and 6" tall). While perception is an individual construct, perceived value is often the result of a collective cultural expectation. That is, we learn to accept values.

Look at the stimulus in that way

The perceived value of goods and service.........................is becoming an increasingly prominent factor in the purchase decisions of modern consumers......................Thus it can be concluded that consumers will be increasingly willing to spend FOR $$something$$ that are high-quality and durable.

As they turn out, in a circular manner, HQ and durable are cardinal elements of the perception (perceived) of goods and services of custormers.

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Re: The perceived value of goods and services, rather than just [#permalink]

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21 Apr 2013, 16:26
All of that is the perception of spending for something. Hard to get around what we perceive we are buying and the potential for deception.
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Joined: 21 Apr 2013
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Re: The perceived value of goods and services, rather than just [#permalink]

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21 Apr 2013, 18:21
The whole system is a shell game. Might look at it this way. Businesses are much more effective in their pricing strategies. More object (relatively speaking then consumers who are most likely to be motivated based on class envy, or other factors that are subject to marketing forces. Careful positioning and pricing strategy can create a situation in which perceived value increase, while actual quality decreases. This wouldn't be the case in a completely ethical culture where supply and demand function very cleanly. Unfortunately, supply and demand curves are skewed by leveraged contract positions driven by perceived value on the benefit side of the equation. What we think of as intrinsic value is more likely just the fixing of perceived value at a point in time further down the production line, as in wages. So that while both parties might agree to their mutual benefit and detriment, where demand for labor is strong, business owners may require more work from existing staff without hiring new people and increasing the payroll. The real perverse nature of shifting these risks and costs is that we come to accept certain levels of compensation as we buy into cultural expectations about our worth. That is, we don't have much choice but to agree accept the terms of lower wages as business seek to increase profits or market share. The perceived value of workers may be high, but there is not way that a business is going to negotiate to meet those terms. Even with competition, it will be the lowest acceptable compromise.

One final example, the petroleum refinement industry. Fuel has a perceived value in terms of necessity. Yet a company has no incentive to build new refineries as they see better gas mileage standards and new forms of energy, and declining demand. They likewise benefit from predictable and cyclical events in future's markets. The perceived value is there in the gas, but what about the fuel's future availability? It's resilience to acts of God, and depreciation of hard assets? At what point will a producer see value in building more refinement capacity? Not much unless you are into ethenol and where I come from, that is definitely a government driven market perception of value.
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Re: The perceived value of goods and services, rather than just [#permalink]

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27 Oct 2013, 05:58
2
KUDOS
carcass wrote:
The perceived value of goods and services, rather than just their price, is becoming an
increasingly prominent factor in the purchase decisions of modern consumers, a new report has
indicated. Thus it can be concluded that consumers will be increasingly willing to spend extra on
goods and services that are high-quality and durable.

For the above statements to be true, which of the following must be true?

(A) The price of a product plays no role in the making of purchase decisions by modern
consumers
(B) There is a positive relation between the quality of a product and its durability
(C) The modern consumer is not likely to allow the quality of a product to determine his
purchase decision
(D) The ideal way for manufacturers to charge more for their products is to increase the
perceived value of their products in the minds of the modern consumer
(E) The durability of a product is in some way related to its perceived value in the minds of
modern consumers

When solving CR questions the most important aspect to keep in mind is the conclusion and it becomes more important in strengthen/weaken/assumption questions.
Lets have a look at this question

Conclusion : Consumers are willing to pay a high price if the product is of High quality and durability.
Premise: Perceived value of product , rather than just price is having an effect on the consumers when they have to make a decision.

If we just create a logical structure of the argument here the conclusion is loosely based on fact "perceived value ..." -> "consumers are willing to pay .... high price" so there is a sudden jump here.
Some assumptions that can help cover this jump are :
1. High quality and durability products have higher perceived value than other similar priced products in the market.
Eg if majority of Laptop bags are being sold for $100 USD in the market and a laptop bag is priced at$150 , then it is considered of high quality even though there may be many other high quality bags selling at \$100 USD.

Taking this in mind and focusing on our conclusion lets take a look at the following answer choices

(A) The price of a product plays no role in the making of purchase decisions by modern
consumers.
- No role is an extreme answer and can be rejected right away , the conclusion never says that price pays no role.

(B) There is a positive relation between the quality of a product and its durability
- Out of scope answer choice , conclusion talking about consumers willing to pay high price.

(C) The modern consumer is not likely to allow the quality of a product to determine his
purchase decision
- Opposite to our conclusion and assumption.

(D) The ideal way for manufacturers to charge more for their products is to increase the
perceived value of their products in the minds of the modern consumer
- Conclusion is not talking about how manufacturers charge for their products ( remember focus on conclusion).

(E) The durability of a product is in some way related to its perceived value in the minds of modern consumers
- Bingo , this is what is pre-assumed.
Also this conclusion passes the negation test where if we negate the argument -
" The durability of a product is in no way related to its perceived value in the minds of modern consumers" then it breaks down our conclusion.

Hope this post is useful for everyone.

Kudos me if you like the post !!!!!!!!!!
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Re: The perceived value of goods and services, rather than just [#permalink]

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27 Oct 2013, 06:19
Durability is a perception. Any expectation of durability is only concluded after the product is purchased and put in use.
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Posts: 10
Re: The perceived value of goods and services, rather than just [#permalink]

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15 Dec 2013, 00:58
Has to be E.
The conclusion is- "that consumers will be increasingly willing to spend extra on
goods and services that are high-quality and durable."
Unless the durability had some link to the perceived value of the product in consumers mind, they wont shell out more money for the product.
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Posts: 10334
Re: The perceived value of goods and services, rather than just [#permalink]

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08 Dec 2015, 00:23
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Re: The perceived value of goods and services, rather than just [#permalink]

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30 Jan 2018, 18:43
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Re: The perceived value of goods and services, rather than just   [#permalink] 30 Jan 2018, 18:43
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