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13 Mar 2016, 06:42
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Hi guys,
This is officially my first topic here. I realize its not a good start to ask people for help, but I'll make sure to post any interesting GMAT observations or useful materials over the next couple of weeks. I've done around 70 hours of studying so far (51 days, half way through my final year of BSc in engineering) and my progress has been slower than expected. I have completed 3 essays but the one I did today (MGMAT CAT) felt a little better. I urge anyone with any experience to give me some feedback even if it's just a rating that he/she finds fair enough. I need to know if my AWA needs work so that I can focus my efforts on the topics I'm currently struggling with.
Thank you so much for reading this
Zak
ESSAY QUESTION:
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.
YOUR RESPONSE:
The author begins his argument by stating that promotional price reductions on energy drinks resulted in a spike in unit sales. The author also states that further price reductions will be made on all products to improve the company's profitability and brand image. The author's argument is flawed due to his weak underlying assumptions.
First, the author assumes that only the price reductions contributed to the sales spike seen by the company. However, there are many factors to consider such as product seasonality, such as rise in beverage sales during summertime or during final exams week when students all over the country are consuming energy drinks endlessly. The argument can be strengthened if the author tries compares sales numbers to those of previous years during the same time period
Second, the argument states that further price reductions on all drinks will increase profitability. This is not necessarily true if some products are priced very close to their break-even point, therefore any price reductions may render the product unprofitable. The argument also fails to consider the amount of sales volume needed to offset the price reductions; if that number was calculated and found to be easily attainable, the argument would be more concrete.
Finally, the argument states that price reductions will enhance the company's brand image. This assumption fails to consider other important factors such as marketing campaigns, which can shape how the company is viewed by its customers. Furthermore, the company's products may be perceive as low quality if they are continuously underpriced compared to their competition.
In conclusion, the author fails to address some important issues in his argument. The rise in beverage sales may not depend only on one factor as we've seen before. In addition, the company's profitability and brand image can actually diminish if the new price reduction campaign is implemented.
This is officially my first topic here. I realize its not a good start to ask people for help, but I'll make sure to post any interesting GMAT observations or useful materials over the next couple of weeks. I've done around 70 hours of studying so far (51 days, half way through my final year of BSc in engineering) and my progress has been slower than expected. I have completed 3 essays but the one I did today (MGMAT CAT) felt a little better. I urge anyone with any experience to give me some feedback even if it's just a rating that he/she finds fair enough. I need to know if my AWA needs work so that I can focus my efforts on the topics I'm currently struggling with.
Thank you so much for reading this
Zak
ESSAY QUESTION:
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.
YOUR RESPONSE:
The author begins his argument by stating that promotional price reductions on energy drinks resulted in a spike in unit sales. The author also states that further price reductions will be made on all products to improve the company's profitability and brand image. The author's argument is flawed due to his weak underlying assumptions.
First, the author assumes that only the price reductions contributed to the sales spike seen by the company. However, there are many factors to consider such as product seasonality, such as rise in beverage sales during summertime or during final exams week when students all over the country are consuming energy drinks endlessly. The argument can be strengthened if the author tries compares sales numbers to those of previous years during the same time period
Second, the argument states that further price reductions on all drinks will increase profitability. This is not necessarily true if some products are priced very close to their break-even point, therefore any price reductions may render the product unprofitable. The argument also fails to consider the amount of sales volume needed to offset the price reductions; if that number was calculated and found to be easily attainable, the argument would be more concrete.
Finally, the argument states that price reductions will enhance the company's brand image. This assumption fails to consider other important factors such as marketing campaigns, which can shape how the company is viewed by its customers. Furthermore, the company's products may be perceive as low quality if they are continuously underpriced compared to their competition.
In conclusion, the author fails to address some important issues in his argument. The rise in beverage sales may not depend only on one factor as we've seen before. In addition, the company's profitability and brand image can actually diminish if the new price reduction campaign is implemented.
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