Sales of telephones have increased dramatically over the last year. In

Question

Sales of telephones have increased dramatically over the last year. In order to take advantage of this increase, Mammoth Industries plans to expand production of its own model of telephone, while continuing its already very extensive advertising of this product.

Which of the following, if true, provides most support for the view that Mammoth Industries  cannot  increase its sales of telephones by adopting the plan outlined above?

(A) Although it sells all of the telephones that it produces, Mammoth Industries' share of all telephone sales has declined over the last year.

(B) Mammoth Industries' average inventory of telephones awaiting shipment to retailers has declined slightly over the last year.

(C) Advertising has made the brand name of Mammoth Industries' telephones widely known, but few consumers know that Mammoth Industries owns this brand.

(D) Mammoth Industries' telephone is one of three brands of telephone that have together accounted for the bulk of the last year's increase in sales.

(E) Despite a slight decline in the retail price, sales of Mammoth Industries' telephones have fallen in the last year.

Source  :  GMATPrep Default Exam Pack 
And  OG11 Q111

ChrisLele · Accepted Answer

16. Sales of telephones have increased dramatically over the last year. In order to take advantage of this increase, Mammoth Industries plans to expand production of its own model of telephone, while continuing its already very extensive advertising of this product.

Which of the following, if true, provides most support for the view that Mammoth Industries cannot increase its sales of telephones by adopting the plan outlined above?

(A) Although it sells all of the telephones that it produces, Mammoth Industriesâ€™ share of all telephone sales has declined over the last year.

This does not weaken the argument. In fact, Mammoth sold all of its phones. By increasing production it will in all likelihood sell the extra phones.

(B) Mammoth Industriesâ€™ average inventory of telephones awaiting shipment to retailers has declined slightly over the last year.

Not quite sure how this relates to the argument. Telephones awaiting shipment and telephones sold do not fall into the same category.

(C) Advertising has made the brand name of Mammoth Industriesâ€™ telephones widely known, but few consumers know that Mammoth Industries owns this brand.

People are buying the phone. That is the important part. Whether these people know that Mammoth owns the brand is not important to sales.

(D) Mammoth Industriesâ€™ telephone is one of three brands of telephone that have together accounted for the bulk of the last yearâ€™s increase in sales.

That's great - looks like mammoth is doing well, and will continue to do well by expanding its production.
 
 (E) Despite a slight decline in the retail price, sales of Mammoth Industriesâ€™ telephones have fallen in the last year.

Hmm...suddenly things do not look so rosy for Mammoth. The rest of the market did well, yet Mammoth phones did poorly. Thus, one can't base market trends on Mammoth's phones sales. Sure the market may continue to do well, but that does not imply Mammoth will be able to take advantage of a surging market.

mejia401 · Answer

Sales of telephones have increased dramatically over the last year. In order to take advantage of this increase, Mammoth Industries plans to expand production of its own model of telephone, while continuing its already very extensive advertising of this product.

Conclusion:  Mammoth Industries cannot increase its sales of telephones by adopting the plan outlined above 
Reasoning:   Sales of phone increased. M. increases phone productions. Still, M.I. cannot increase sales only if: the model is outdated; the phones don't work and are returned;prices dropped,etc.

(A) Although it sells all of the telephones that it produces, Mammoth Industries' share of all telephone sales has declined over the last year.  Wrong - shell game. Clearly, the total share of the market <> absolute value of sales. If total share gets bigger + but company sales remain flat, then producing phones will hurt. But, if total share increases + company sales increase very litte, producing more phones could increase sales. This always the trap answer: for absolute value answers, trap is percentage; for percentage answers, the trap is absolute value answers.

(B) Mammoth Industries' average inventory of telephones awaiting shipment to retailers has declined slightly over the last year.  Wrong - reverse answer. If times awaiting shipment has decreased, then more phones can be sold. Thus, there can be more sales.

(C) Advertising has made the brand name of Mammoth Industries' telephones widely known, but few consumers know that Mammoth Industries owns this brand.  Wrong - if few customers know of brand, then sales can increase.

(D) Mammoth Industries' telephone is one of three brands of telephone that have together accounted for the bulk of the last year's increase in sales.  Wrong - If market is increasing, then more sales can occur.

(E) Despite a slight decline in the retail price, sales of Mammoth Industries' telephones have fallen in the last year.  Correct - if prices have fallen, then producing more phones will saturate the market, thus accelerating the decline in prices.

IMO E

thevenus · Answer

The premise says that:-
 ".....while continuing its already very extensive advertising of this product."

The conclusion says that:-
 the company wants to expand the production of its own telephone models BECAUSE "Sales of telephones have increased dramatically over the last year...." 
 
 The company could not make large sales despite good advertisement.

(E) suggests that even though the company reduced the price the sales fell down.This means that there is no such shortage of the products but rather the quality is not up to the mark so that people can buy it.

souvik101990 · Answer

the key is the words "in order to take advantage of this increase". these words show the assumptions that are being made.
in particular, the passage assumes that an overall increase in telephone sales, industry-wide, will automatically translate into an increase in sales for mammoth industries.

choice (e) severs this connection completely - it showed that mammoth's sales dropped as the industry-wide sales increased sharply - and so utterly destroys this assumed connection.

CharuKapoor · Answer

I guess the answer is  E .

Mammoth Industries plans to expand production of its own model of telephone --- BECAUSE --- Sales of telephones have increased dramatically over the last year and it wants to take advantage of the situation.

We are asked a question as to why they might not be successful in doing so/ why this might not be such a good plan.

(A) Although it sells all of the telephones that it produces, Mammoth Industries' share of all telephone sales has declined over the last year.
 If it sells whatever it produces...this means that they are meeting their targets and so might be the case this time too. Doesn't tell us why this is not a good plan. INCORRECT

(B) Mammoth Industries' average inventory of telephones awaiting shipment to retailers has declined slightly over the last year.
 If the inventory or stock has declined, it means either the consumption is more or production is less. We are not sure which is he case and hence it doesn't tell us why this is not a good plan. INCORRECT.

(C) Advertising has made the brand name of Mammoth Industries' telephones widely known, but few consumers know that Mammoth Industries owns this brand.
 Out of scope. Doesn't tell us why this is not a good plan. INCORRECT.

(D) Mammoth Industries' telephone is one of three brands of telephone that have together accounted for the bulk of the last year's increase in sales.
 If they are producing a brand that accounted for the bulk in sales. This might be a good idea. We are hunting for - why this might not be a good idea. INCORRECT.

(E) Despite a slight decline in the retail price, sales of Mammoth Industries' telephones have fallen in the last year.
 What ??? They were not able to sell despite of decline in retail price. Then this definitely is not a good plan. CORRECT

gmatdummy01 · Answer

Sales of telephones have increased dramatically over the last year. In order to take advantage of this increase, Mammoth Industries plans to expand production of its own model of telephone, while continuing its already very extensive advertising of this product.

Which of the following, if true, provides most support for the view that Mammoth Industries cannot increase its sales of telephones by adopting the plan outlined above?

Plan: Expand production, maintain extensive advertising
We need an answer to prove that PLAN won’t increase sales of MI’s phones 
  
(A) Although it sells all of the telephones that it produces, Mammoth Industries' share of all telephone sales has declined over the last year.

- Mammoth has sold all its phones, and according to the prompt, it has expanded production (therefore, more sales & profit, since it was able to sell all)
- Mammoth’s share in telephone sales is irrelevant on whether Mammoth can increase or decrease its sales

(B) Mammoth Industries' average inventory of telephones awaiting shipment to retailers has declined slightly over the last year.  - So if Mammoth expands production, inventory will increase, therefore, shipment (sales) will increase

(C) Advertising has made the brand name of Mammoth Industries' telephones widely known, but few consumers know that Mammoth Industries owns this brand.  - Irrelevant in terms of sales

(D) Mammoth Industries' telephone is one of three brands of telephone that have together accounted for the bulk of the last year's increase in sales.  
- Last year’s sales is irrelevant
- Mammoth has only increased its sales this year

(E) Despite a slight decline in the retail price, sales of Mammoth Industries' telephones have fallen in the last year.  - Correct answer because we know that expansion of production will not address the issue as the fact that there was a decline in the retail price and consequently a decline in sales suggests that there may be external factors as to why the phones are not selling
- Increasing supply without a corresponding demand will result to declined sales or loss

arkle · Answer

(A) Although it sells all of the telephones that it produces, Mammoth Industries' share of all telephone sales has declined over the last year.

This a classic trap answer.

Whenever you see %age decrease an immediate thought pattern should occur in your mind that numbers must be increasing somewhere. (GMAT Pattern) Here is how -

1 yr ago -

Let Mammoth Industries' market share be - 55%
Total number of handsets sold be - 100
Number of handsets Mammoth Industries sold - 55 handsets.

Today -

Mammoth Industries' share of all telephone sales has declined over the last year.

Let Mammoth Industries' market share be - 50% (reduced from 55%)
Total number of handsets sold be - 1000
Number of handsets Mammoth Industries sold - 500 handsets.

i.e. Mammoth Industries sold more handsets than last year, even though market share has declined as you can see above. Since we have to destroy this option we increased the market size (one extreme). It is a variable quantity and you should use it to your advantage.

Takeaway - If you have to weaken a %age decrease option/question then immediate find an answer choice that says the total number must have increased somewhere.

Here is another problem using the same concept -

in-the-united-states-of-the-people-who-moved-from-one-state-136004.html

NandishSS · Answer

HI  GMATNinja ,  mikemcgarry ,  DmitryFarber ,  MagooshExpert  (Carolyn),  ccooley ,  GMATGuruNY ,  AjiteshArun   EMPOWERgmatVerbal ,  EducationAisle ,  generis ,  jennpt ,  VeritasPrepErika ,  MartyTargetTestPrep

Can you please help me with the below question.

Sales of telephones have increased dramatically over the last year

Does it not go against premise?

E.Despite a slight decline in the retail price, sales of Mammoth Industries' telephones have fallen in the last year.

GMATNinja · Answer

The first sentence ("Sales of telephones have increased dramatically over the last year") is a  general  statement. Telephone sales have increased dramatically  in general . Does that mean sales have increased for every single company that sells telephones? Not necessarily.

For example, automobile sales may have increased dramatically in the United States last year. But sales of Hummers may have plummeted that same year. Even if some individual companies saw decreased sales, we would still say that automobile sales (in general) increased dramatically.

Likewise, even though sales of telephones have increased dramatically over the last year, that doesn't not necessarily mean that Mammoth Industries' telephone sales have increased.

I hope that helps!

Sab2 · Answer

Quick question regarding Option D - 
Since Mammoth along with 2 other brands accounted for bulk of last year's sales, the market might have already reached a saturation point. So even with continuing the already extensive advertising the sales might not increase. Even from the premise, Mammoth might have already taken advantage of the dramatic increase in sales last year and there is no mention of current market demand. Why can this not be a possibility?

As a counter for option E - 
Aren't these two events independent 
1. The decline in sales last year
2. The possibility of no future increase in sales with expanding production and continuing the advertising.
Also, referring to the "slight decline in retail price" part, slight decline could mean 1 cent or any $ amount. Either way we do not know if it was substantial enough to effect the sales. Is n't this option too ambiguous?

Thanks

GMATNinja · Answer

To answer the question, we are looking for the answer choice that "provides  most  support for the view that Mammoth Industries cannot increase its sales." So a couple of answer choices could leave open the  possibility  that Mammoth cannot increase its sales -- our task is to determine which provides the most support for this position.

To go with (D), you have to make the assumption that Mammoth's increase in sales last year have saturated the market. This assumption is not supported by the passage -- while it is  possible  that the increased demand for Mammoth phones was just a one-year phenomenon, you can't conclude that this is true based on the given information.

If anything, the information in (D) makes it more likely that Mammoth's plan will succeed -- demand is up, so the advertising campaign is working! Nothing indicates that this trend will reverse itself, so it seems like a good time to produce more telephones.

(E), on the other hand, paints a different picture: sales of Mammoth phones have fallen in the past year, even if the industry as a whole is doing well. Mammoth even decreased its retail prices, and yet demand for their product is still down.

So what do Mammoth executives plan to do? They will continue with the same advertising program -- which was clearly not very effective, as sales are down -- and just produce more telephones. Because demand declined last year and Mammoth is not doing anything to address this issue, simply increasing production will not somehow increase sales.

(E) provides strong support for the position that Mammoth cannot increase its sales with the given plan, so (E) is the correct answer.

I hope that helps!

lakshya14 · Answer

We never talked about the "advertisement" in the correct answer?

svasan05 · Answer

Hi Lakshya

Let us analyze what the stimulus tells us about the advertising:

"...while  continuing  its already very extensive advertising of this product."

Therefore, the mention of advertising in the stimulus is merely to rule out an additional factor which may reverse the currently declining sales of Mammoth Industries' telephone. The company only plans to "continue" its extensive advertising, not increase it substantially. We also know that "...sales of Mammoth Industries' telephones have  fallen  in the last year" as mentioned in Option (E). This decline has to be considered in the context of the extensive advertising that is currently in place, which is expected to continue and not increase any further. Therefore, this tells us that there are other factors at play that have led to a fall in the sales of Mammoth Industries' telephone last year despite the "dramatic" increase in telephone sales overall over the same period.

Hence option (E) tells us that the strategy of expanding production will not help in increasing sales of Mammoth Industries' telephones.

Hope this helps.

lakshya14 · Answer

I agree that only (E) is the correct answer, but (E) has a flaw in it. The argument asks whether the "plan" of marketing will be successful, but in (E) decline in sales despite the decrease in prices could be result of poor marketing, and we would want to market more this time around to not to let the opportunity pass by?
 AndrewN

AndrewN · Answer

Hello,  lakshya14 . You have to be careful not to read an argument, conclusion, or plan too narrowly and see only what you want to see. The plan in the last line of the passage is two-pronged:

1)  to expand production of its own model of telephone

2)    its already very extensive advertising of this product  (i.e. its own model of telephone)

It is this more comprehensive plan that we need to analyze. Will Mammoth Industries be able to capitalize on market trends by expanding production of its own telephones and promoting them?

We cannot say, as you suggested, that the decline in  sales of Mammoth Industries' telephones  from the past year is due to "poor marketing," since GMAC™ has that base covered, describing the marketing/advertising strategy of the company as  already very extensive . Choice (E) works because,  in spite of  these promotional efforts, Mammoth Industries is still having trouble selling its phones, bucking the market trend. Why would we have reason to believe that continuing in the same vein but expanding production would necessarily lead to better results (sales) for Mammoth? Choice (E) is a compelling answer in light of the above considerations.

I hope that helps dispel—or at least diminish—your concerns. Thank you for thinking to ask.

- Andrew

rashwiniyer · Answer

I found this question very strange. Options talk about the past to prove that Mammoth Industries CANNOT increase its sales of telephones by adopting the plan outlined.
How can we assume this? Even if something has not done well last year, can it not do great the next year or future?

It is an OG question, so certainly my understanding is wrong. 
I am struggling with such questions. Can anyone please suggest?

GMATNinja · Answer

Remember that we're just trying to find the answer choice that "provides   most  support  for the view that Mammoth Industries cannot increase its sales of telephones by adopting the plan." So, we don't need to PROVE that the plan is doomed to failure -- we just need to support the view that the plan isn't going to work.

Let's say that my friend predicts that she'll run an upcoming 10 kilometer race in under 50 minutes. I could (rudely) suggest that this future plan isn't going to work because of some past evidence. For example, I could say "Well, you're using the same training plan as last year, and it took you over an hour to run that race."

Does this evidence  prove  that my friend (or frenemy...) isn't going to achieve her goal? Nope, she could still do it! But the evidence does provide support for the view that she's not going to finish in under 50 minutes.

Similarly, Mammoth Industries plans to use the same advertising campaign and expand production of its phone. Its goal is to increase sales of the phone.

You could say, "Well, phone sales are  already  declining, so if you just make more of them then you're not going to increase sales."

That's essentially what (E) says:
 
From this, we know that sales are declining even though the retail price went down. If Mammoth doesn't change its advertising plan and just makes more phones, then it doesn't seem likely that they'll see the sales increases that they want.

(E) is the correct answer.

I hope that helps!

rickyric395 · Answer

KarishmaB ,  GMATNinja  ,  AjiteshArun , in support of B, if inventory has  decreased slightly  in light that sales of telephones is on the rise. Doesn't it mean that it may be possible that MI's phone sale is not good and increase in production won't do any good? I mean since phone sales is on rise and consequently inventory should have decreased rapidly, then increase in production would have made sense. But it not this case as stated in B

AjiteshArun · Answer

Hi rickyric395,

Inventory management is very complex, so what you are saying is  possible . However, we must not look at option B in isolation.

B.  A decline in inventory levels could be due to many reasons, but in the absence of any other information, we should generally assume that  a drop in inventory levels is a good thing  (it indicates  greater-than-expected demand ). Conversely, if inventory piles up, that's generally a bad sign (it indicates  lower-than-expected demand ).

(Think about all the newspaper stories that discuss iPhone inventory levels. When inventory levels fall, Apple is usually struggling to meet increased demand.)

We can thus say that option B (very slightly) strengthens the view that Mammoth Industries  can  increase its sales of telephones by adopting the plan.

E.  Option E tells us that although sales of telephones  have increased dramatically  over the last year, sales of Mammoth Industries' telephones, even with extensive advertising and a small price cut, have fallen in the last year.

Given that  Mammoth's plan is only to increase production  ("extensive advertising" won't change), option E is better than the other options.

Sales of telephones have increased dramatically over the last year. In

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Sales of telephones have increased dramatically over the last year. In

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

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Perfect 805 Score Debrief by Julia

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