Bunuel
Marketing analyst: Several small businesses complain that offering online discount coupons reduces their revenue, since customers who use the coupons pay less. However, companies that have issued such coupons in the past year have seen substantial growth in overall sales. Moreover, there is a strong correlation between increases in the number of coupon downloads and increases in a company’s monthly revenue. Therefore, offering online discount coupons clearly increases profits rather than reduces them.
The analyst’s reasoning is most vulnerable to criticism on which of the following grounds?
A. It overlooks the possibility that two correlated trends may result from an independent factor rather than one causing the other.
B. It assumes, without justification, that customers who use coupons would not have purchased goods at full price.
C. It fails to consider that increased revenue does not necessarily imply increased profits.
D. It presumes that the growth in overall sales occurred only after coupons were introduced.
E. It ignores the possibility that businesses offering coupons differ in important ways from those that do not.
There is a complain from several small businesses that offering discounts will lead to reduced revenue. The reasoning provided behind the view of reduced revenue is as coupons are given on discounted price - that is at a price lesser than the marked price ( M.R.P). So, to maximise revenue we need to sell more number of products to reap the same revenue.
The next line, brings in the term
HOWEVER - which is going to introduce an opinion which will take a shift from the earlier proposed view. The same companies which has opposed the online coupons, have issued such coupons in the past year and have seen a substantial increase in overall sales. The marketing analyst has bought revenue and sales on the same page.
To add a point, the marketing analyst mentions a strong correlation between increases in coupon sales ( online downloads) vs the increase in monthly revenue. The initial view of the author is about revenue and now the shift is moving towards sales, the common point linking these two distinct terms in the discounted coupon sales.
The Marketing Analyst concludes that , increased number of discounted sales coupons will increase the profits only, and does not reduce it. Now, the author has bought all distinct terminologies - like Sales, Revenue and Profits on the same page.
The analyst reasoning is vulnerable to criticism is :
Since three different terminologies are interlinked to a common concept, the increase of one figure, doesn’t necessarily mean the other two terms are likely to increase. May be, they are inversely proportional.
Option C is the correct answer. As increased revenue doesn’t necessarily mean increased profits. May be the cost incurred might have been high, thereby decreasing the profits.
Option C