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20 Nov 2019, 09:06
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Read the statement(s) and the instructions that follow, and then make any notes that will help you plan your response. Begin typing your response in the box at the bottom of the screen.
The following appeared in a corporate memorandum of a beverage manufacturer:
“Our promotional price reductions on energy drinks have been highly successful, as we have seen a dramatic increase in unit sales. Further, surveys of our consumers indicate that this promotion was favorably received by the majority of our customers. Therefore, to improve our company’s profitability and enhance its perception in the eyes of consumers, similar price reductions should be offered on all drinks produced by our firm.”
Discuss how well reasoned you find this argument. Point out flaws in the argument's logic and analyze the argument's underlying assumptions. In addition, evaluate how supporting evidence is used and what evidence might counter the argument's conclusion. You may also discuss what additional evidence could be used to strengthen the argument or what changes would make the argument more logically sound.
The argument claims that because the promotional price reductions on energy drinks have been successful and the unit sales for the energy drink has increased, there is a correlation between the promotion and increased sales and the company should apply similar price reductions on all drinks produced by the firm to attain higher profitability and enhance company’s perception in the eyes of its consumers. Stated in this way the argument fails to take into consideration several important factors, which can help to evaluate the validity of the argument. The conclusion relies on assumptions, for which there is no clear evidence. Therefore, the argument is rather weak, unconvincing and has several flaws.
First, the argument readily assumes that because the unit sales of energy drinks has increased dramatically, it is due to the promotional price reductions that company has implemented. This statement ignores the other key factor that might have played a big role in increasing the unit sales of energy drinks. For example, the competitor might have increased the price of the same product leaving customers with no option but to buy the cheaper energy drink. In addition, the argument fails to mention the demand and supply statistics for the energy drinks. It is possible that the supply for the competitor’s energy drink is not sufficient to meet the demand and customers who love energy drinks are forced to purchase whatever is available. The argument would have been much clearer if it explicitly compared the company's statistics with its competitors to evaluate other factor that might be responsible for the increase in sales.
Second, the arguments claims that the surveys of the company's customers indicate that the promotion was favorably received by the majority of customers. This again is very weak and unsupported claim as the argument fails to establish a correlation between the survey results and the increase in unit sales for energy drinks. There are many possibilities for customers to give favorable response to a company’s product. First, a customer who is brand loyal might give positive response to company's other products in a survey even if he or she hasn't tried the product. In this case, though the customer’s response to the survey would be favorable, it might not be the reason behind increased sales. Second, customers sometimes just to get rid of the survey question popped up on the device click yes or no in haste without even reading the question. This again would give a favorable response but would not increase the sales. The argument could have been strengthened if the company had data on how many people who actually gave a positive response to the promotion actually purchased the energy drink. If such a correlation had been shown for the promotion, then the argument would have sounded a bit more convincing.
Finally, the argument concludes that the company should offer such price reductions on all drinks produced by the firm to improve its profitability and enhance its perception in the eyes of consumers. From this statement again, it is difficult to ascertain if price reduction on other products will result in increased profitably or not. One way to strengthen the argument is to evaluate the factors such as competitors’ product prices, marketing strategies adopted by similar products in the market, who is the target customer, how much money a customer is ready to spend on an energy drink, etc. In the absence of these factors the argument fails to achieve its desired result.
In summary, the argument is flawed and therefore unconvincing. It could be considerably strengthened if the company mentions all the key factors that can impact the success of a promotional activity.
Source : ManhattanPrep Practice Test
The following appeared in a corporate memorandum of a beverage manufacturer:
“Our promotional price reductions on energy drinks have been highly successful, as we have seen a dramatic increase in unit sales. Further, surveys of our consumers indicate that this promotion was favorably received by the majority of our customers. Therefore, to improve our company’s profitability and enhance its perception in the eyes of consumers, similar price reductions should be offered on all drinks produced by our firm.”
Discuss how well reasoned you find this argument. Point out flaws in the argument's logic and analyze the argument's underlying assumptions. In addition, evaluate how supporting evidence is used and what evidence might counter the argument's conclusion. You may also discuss what additional evidence could be used to strengthen the argument or what changes would make the argument more logically sound.
The argument claims that because the promotional price reductions on energy drinks have been successful and the unit sales for the energy drink has increased, there is a correlation between the promotion and increased sales and the company should apply similar price reductions on all drinks produced by the firm to attain higher profitability and enhance company’s perception in the eyes of its consumers. Stated in this way the argument fails to take into consideration several important factors, which can help to evaluate the validity of the argument. The conclusion relies on assumptions, for which there is no clear evidence. Therefore, the argument is rather weak, unconvincing and has several flaws.
First, the argument readily assumes that because the unit sales of energy drinks has increased dramatically, it is due to the promotional price reductions that company has implemented. This statement ignores the other key factor that might have played a big role in increasing the unit sales of energy drinks. For example, the competitor might have increased the price of the same product leaving customers with no option but to buy the cheaper energy drink. In addition, the argument fails to mention the demand and supply statistics for the energy drinks. It is possible that the supply for the competitor’s energy drink is not sufficient to meet the demand and customers who love energy drinks are forced to purchase whatever is available. The argument would have been much clearer if it explicitly compared the company's statistics with its competitors to evaluate other factor that might be responsible for the increase in sales.
Second, the arguments claims that the surveys of the company's customers indicate that the promotion was favorably received by the majority of customers. This again is very weak and unsupported claim as the argument fails to establish a correlation between the survey results and the increase in unit sales for energy drinks. There are many possibilities for customers to give favorable response to a company’s product. First, a customer who is brand loyal might give positive response to company's other products in a survey even if he or she hasn't tried the product. In this case, though the customer’s response to the survey would be favorable, it might not be the reason behind increased sales. Second, customers sometimes just to get rid of the survey question popped up on the device click yes or no in haste without even reading the question. This again would give a favorable response but would not increase the sales. The argument could have been strengthened if the company had data on how many people who actually gave a positive response to the promotion actually purchased the energy drink. If such a correlation had been shown for the promotion, then the argument would have sounded a bit more convincing.
Finally, the argument concludes that the company should offer such price reductions on all drinks produced by the firm to improve its profitability and enhance its perception in the eyes of consumers. From this statement again, it is difficult to ascertain if price reduction on other products will result in increased profitably or not. One way to strengthen the argument is to evaluate the factors such as competitors’ product prices, marketing strategies adopted by similar products in the market, who is the target customer, how much money a customer is ready to spend on an energy drink, etc. In the absence of these factors the argument fails to achieve its desired result.
In summary, the argument is flawed and therefore unconvincing. It could be considerably strengthened if the company mentions all the key factors that can impact the success of a promotional activity.
Source : ManhattanPrep Practice Test
Abhi077
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20 Nov 2019, 10:20
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Nice effort. would rate it 5 on 6
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