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# There is relativley little room for growth in the overall

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Manager
Joined: 14 Jun 2009
Posts: 90
There is relativley little room for growth in the overall [#permalink]

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23 Jun 2009, 01:49
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There is relativley little room for growth in the overall carpet market, which is tied to the size of the population. Most who purchase carpet do so only once or twice, first in their twenties ot thirties, and then perhaps again in their fifties or sixties. Thus as the population ages, companies producing carpet will be able to gain market share in the carpet market only through purchasing competitors, and not through more agressive marketing.

Which of the following, if true, casts the most doubt on the conclusion above?

(A) Most of the major carpet producers market other floor coverings as well.
(B) Most established carpet producers market several different brand names and varieties, and there is no remaining niche in the market for new brands to fill.
(C) Two of the three mergers in the industry's last ten years led to a decline in profits and revenues for the the newly merged companies.
(D) Price reductions, achieved by cost-cutting in production, by some of the dominant firms in the carpet market are causing other producers to leave the market altogether.
(E) The carpet market is unlike most markets in that consumers are becoming increasingly resistant to new patterns and styles.

NOTE: although it has been previosly discussed on the forum, im still not clear with the options

i went for B
Manager
Joined: 12 Aug 2008
Posts: 185
Location: Buffalo, NY
Schools: Simon '11

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23 Jun 2009, 05:27
I agree with B. If there is no additional market for other kinds of carpet, then the only way to gain market share would be to acquire another manufacturer's share.

This is my logic for the incorrect answers:

A) Out of scope. The author is talking about market share for carpeting, other floor covers are not applicable to this question.

C) Again, out of scope. The author is talking about market share. The concept of revenue is never addressed.

D) This is focused on something that would prevent a manufacturer from entering the market, not for a company searching to increase their market share.

E) This would actually support the author's conclusion that it would be impossible to innovate.
Director
Joined: 27 Jun 2008
Posts: 526
WE 1: Investment Banking - 6yrs

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23 Jun 2009, 05:33
I went with B too
Intern
Joined: 15 May 2009
Posts: 13

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23 Jun 2009, 07:26
B for me.
Senior Manager
Joined: 15 Jan 2008
Posts: 269

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23 Jun 2009, 09:28
2
KUDOS
The question asks to find out a premise which casts most doubt on the conclusion that the only way to increase the market share is to buy competitors...

But the option B supports the conclusion that buying the competitors.

BUT ISNT this wrong.

I will go with option D as it suggests that there are other ways to capture the market share and that way is price reductions.
Manager
Joined: 14 Jun 2009
Posts: 90

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23 Jun 2009, 22:17
i think ur right...this is what was confusing me...thanks a tonne...option D for me
Director
Joined: 03 Jun 2009
Posts: 774
Location: New Delhi
WE 1: 5.5 yrs in IT

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23 Jun 2009, 23:19
B is strengthening the argument, whereas we have been asked to select an option which weakens the argument.

(A) Most of the major carpet producers market other floor coverings as well. -Out of scope
(B) Most established carpet producers market several different brand names and varieties, and there is no remaining niche in the market for new brands to fill. -by saying "there is no remaining niche in the market for new brands" its strengthening the conclusion that there is no other way to increase market share
(C) Two of the three mergers in the industry's last ten years led to a decline in profits and revenues for the the newly merged companies. -Argument talking about market share, not profits and revenues.
(D) Price reductions, achieved by cost-cutting in production, by some of the dominant firms in the carpet market are causing other producers to leave the market altogether. -Correct. Weakens the conclusion that there is no other way to increase market share. If other producers are leaving due to some other reason, then automatically market share for the existing ones will increase
(E) The carpet market is unlike most markets in that consumers are becoming increasingly resistant to new patterns and styles. -Strengthening the argument. This means producers cannot increase market share by creating new patterns or designs
_________________
Manager
Joined: 15 May 2009
Posts: 167

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25 Jun 2009, 18:42
arvs212 wrote:
There is relativley little room for growth in the overall carpet market, which is tied to the size of the population. Most who purchase carpet do so only once or twice, first in their twenties ot thirties, and then perhaps again in their fifties or sixties. Thus as the population ages, companies producing carpet will be able to gain market share in the carpet market only through purchasing competitors, and not through more agressive marketing.

Which of the following, if true, casts the most doubt on the conclusion above?

(A) Most of the major carpet producers market other floor coverings as well.
(B) Most established carpet producers market several different brand names and varieties, and there is no remaining niche in the market for new brands to fill.
(C) Two of the three mergers in the industry's last ten years led to a decline in profits and revenues for the the newly merged companies.
(D) Price reductions, achieved by cost-cutting in production, by some of the dominant firms in the carpet market are causing other producers to leave the market altogether.
(E) The carpet market is unlike most markets in that consumers are becoming increasingly resistant to new patterns and styles.

Conclusion: the ONLY WAY to gain market share is to purchase competing companies, not by more aggressive marketing.
I think (D) undermines this conclusion, it demonstrates ways other than mergers (namely cost-cutting & price reduction) by which companies can gain market share. I know this does not undermine the second part of the conclusion, which is that "aggressive marketing cannot increase market share", but I think (D) is still the best of the available choices.

A - Irrelevant, does not strengthen or weaken.
B - This seems to strengthen, rather than weaken the conclusion. It reinforces the conclusion that "there is NO OTHER WAY" by eliminating a possible method of competition (i.e. exploiting niche markets).
C - This weakens somewhat, it gives examples of failures of the current method (namely, buying out the competition), but it does not undermine the conclusion that buy-outs are the ONLY WAY.
E - This seems to strengthen the conclusion due to the same reason as B, it eliminates a course of action, which, if successful, might weaken the conclusion.
Manager
Joined: 01 May 2009
Posts: 100

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26 Jun 2009, 09:35
D for me tooo.

When most of the guys are leaving the market there wont be any company to overtake.
Re: carpet indstry   [#permalink] 26 Jun 2009, 09:35
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# There is relativley little room for growth in the overall

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