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# White-labelling is the practice is providing a product to

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White-labelling is the practice is providing a product to  [#permalink]

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Updated on: 22 Jun 2017, 22:20
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Difficulty:

65% (hard)

Question Stats:

61% (01:41) correct 39% (01:54) wrong based on 168 sessions

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White-labelling is the practice is providing a product to another company to be sold under that company's high-quality brand. Since white-labelling allows the designer of a product to obtain additional revenue from a given design at minimal cost, and it allows the seller of the white-labelled product to sell a product and obtain product without having had to design the product, white-labelling is usually advantageous for both parties.

Which of the following, if true, most seriously weakens the argument?

A - When the designer of a white-labelled product improves the design, the seller may be able to benefit immediately by switching over to the new design.

B - If consumers learn the details of a white-labelling arrangement, they may perceive the provider of the product as being of low quality.

C - The products best suited to white-labelling are those that are related but not core to the seller's key product offering, if the seller specializes in one offering.

D - The seller of a white-labelled product will have to make some investment in the product, such as designing a brand and a name for the product and dedicating inventory space to that product.

E - The seller of a white-labelled product may not have sufficient knowledge to sell the product through its own sales channels as well as the designer of the product might be able to do.

Source - http://www.gmatfree.com/module-95/white-labelling/

Confusion - well this seems a very easy question, straight weakener. i got stuck with B ane E. Both are quiet close to answer. and i end up selecting the wrong one. i have faced this problem many times that i drill down to 2 answers and then wnd up with the wrong one such as this case.

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Originally posted by aragonn on 22 Jun 2017, 20:18.
Last edited by broall on 22 Jun 2017, 22:20, edited 1 time in total.
Reformatted question
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Re: White-labelling is the practice is providing a product to  [#permalink]

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23 Jun 2017, 11:51
1
The conclusion is both parties will have huge profits.

The assumption is they will keep on selling the duplicate products easily.

A weakener could be something that says they will not be able to sell as many products thus earning huge profits.

A - When the designer of a white-labelled product improves the design, the seller may be able to benefit immediately by switching over to the new design. --> Ok, but not a weakener. Actually a strengthener.

B - If consumers learn the details of a white-labelling arrangement, they may perceive the provider of the product as being of low quality. --> Nice, so if they know its duplicate, they won't buy it. Hence, all profits gone

C - The products best suited to white-labelling are those that are related but not core to the seller's key product offering, if the seller specializes in one offering. --> Come on. Still they will mage some profits.

D - The seller of a white-labelled product will have to make some investment in the product, such as designing a brand and a name for the product and dedicating inventory space to that product. --> Fine, initial investment can lead to huge ROI, right? Hence, not a problem.

E - The seller of a white-labelled product may not have sufficient knowledge to sell the product through its own sales channels as well as the designer of the product might be able to do. --> I don't care whether he has knowledge or he learns it from You tube.
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Re: White-labelling is the practice is providing a product to  [#permalink]

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23 Jun 2017, 12:04
abhimahna

I overthought this question.
B is an obvious answer but I thought that B is too easy to find so it must have some tricks and went to pick D

Isn't D a weakener too as it does talk about some work for seller unlike what argument said ( no product designing for seller)
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23 Jun 2017, 12:11
Leo8 wrote:
abhimahna

I overthought this question.
B is an obvious answer but I thought that B is too easy to find so it must have some tricks and went to pick D

Isn't D a weakener too as it does talk about some work for seller unlike what argument said ( no product designing for seller)

Hi Leo8 ,

The conclusion is based on the premise that initial cost is less and they are getting additional amount. D is saying they need to spend some extra amount before selling.

I can reject D on two basis:

1.. It is attacking the premise. This is strictly not allowed. Premise is a source of truth that must be maintained.

2. It says "some" initial cost. Are we really sure it would make that difference? No, right?

Hence, D is 100% out.

I hope it makes sense.
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Re: White-labelling is the practice is providing a product to  [#permalink]

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23 Jun 2017, 12:28
abhimahna - I want to discuss your first basis.

White-labelling is the practice is providing a product to another company to be sold under that company's high-quality brand.
Since white-labelling allows the designer of a product to obtain additional revenue from a given design at minimal cost,
and it allows the seller of the white-labelled product to sell a product and obtain product without having had to design the product,
white-labelling is usually advantageous for both parties.

Premise doesn't say that seller does not have a cost: It just says that sellers do not have to design the product

D - The seller of a white-labelled product will have to make some investment in the product, such as designing a brand and a name for the product and dedicating inventory space to that product.
This is an outside information, I do not think that it is attacking premise, it can be a situation where seller might not be at an advantageous position due to these costs though we do not know the impact of these cost in order to make it an advantageous one or not - what do you say?
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23 Jun 2017, 12:38
Leo8 wrote:
abhimahna - I want to discuss your first basis.

White-labelling is the practice is providing a product to another company to be sold under that company's high-quality brand.
Since white-labelling allows the designer of a product to obtain additional revenue from a given design at minimal cost,
and it allows the seller of the white-labelled product to sell a product and obtain product without having had to design the product,
white-labelling is usually advantageous for both parties.

Premise doesn't say that seller does not have a cost: It just says that sellers do not have to design the product

D - The seller of a white-labelled product will have to make some investment in the product, such as designing a brand and a name for the product and dedicating inventory space to that product.
This is an outside information, I do not think that it is attacking premise, it can be a situation where seller might not be at an advantageous position due to these costs though we do not know the impact of these cost in order to make it an advantageous one or not - what do you say?

Hi Leo8 ,

I never said no cost. I said minimal cost.

Also, while the argument is talking about no product design cost, Option D is telling more than that cost(inventory and all that stuff). So, if you assume that the other cost will make the overall cost more, this will be against the premise stated. You see what I am trying to convey?

And yes, I truly agree with your last point that since we don't know the impact of these costs, D is out.

Feel free to ask more unless you are Crystal clear
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Re: White-labelling is the practice is providing a product to  [#permalink]

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14 Oct 2017, 06:25
abhimahna wrote:
The conclusion is both parties will have huge profits.

The assumption is they will keep on selling the duplicate products easily.

A weakener could be something that says they will not be able to sell as many products thus earning huge profits.

A - When the designer of a white-labelled product improves the design, the seller may be able to benefit immediately by switching over to the new design. --> Ok, but not a weakener. Actually a strengthener.

B - If consumers learn the details of a white-labelling arrangement, they may perceive the provider of the product as being of low quality. --> Nice, so if they know its duplicate, they won't buy it. Hence, all profits gone

C - The products best suited to white-labelling are those that are related but not core to the seller's key product offering, if the seller specializes in one offering. --> Come on. Still they will mage some profits.

D - The seller of a white-labelled product will have to make some investment in the product, such as designing a brand and a name for the product and dedicating inventory space to that product. --> Fine, initial investment can lead to huge ROI, right? Hence, not a problem.

E - The seller of a white-labelled product may not have sufficient knowledge to sell the product through its own sales channels as well as the designer of the product might be able to do. --> I don't care whether he has knowledge or he learns it from You tube.

HI -- I have doubt here with Option B.

I understand If customer sees product as low quality, they wont buy it. But could you explain "Isnt it we are making extra assumption here as As customer sees product-->it will affect both party". Please elobarate.
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14 Oct 2017, 08:13
pratik1709 wrote:
HI -- I have doubt here with Option B.

I understand If customer sees product as low quality, they wont buy it. But could you explain "Isnt it we are making extra assumption here as As customer sees product-->it will affect both party". Please elobarate.

Hey pratik1709 ,

Here is the catch. We are asked to weaken the conclusion. Now, we are providing an information that is directly attacking my assumption.

Note that Author said "Guys, they will make profits despite whatever they are doing.". This means author is assuming the people siting on the other side to buy these things are stupid.

Now, via option B , I am saying "Hey, if people are not stupid, there is going to be some problem.". i.e. if people learn something about what the sellers are doing, they will screw these sellers obviously by stop buying. So, no buying, no selling and hence no profit.

Does that make sense?

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Re: White-labelling is the practice is providing a product to  [#permalink]

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14 Oct 2017, 08:44
abhimahna wrote:
pratik1709 wrote:
HI -- I have doubt here with Option B.

I understand If customer sees product as low quality, they wont buy it. But could you explain "Isnt it we are making extra assumption here as As customer sees product-->it will affect both party". Please elobarate.

Hey pratik1709 ,

Here is the catch. We are asked to weaken the conclusion. Now, we are providing an information that is directly attacking my assumption.

Note that Author said "Guys, they will make profits despite whatever they are doing.". This means author is assuming the people siting on the other side to buy these things are stupid.

Now, via option B , I am saying "Hey, if people are not stupid, there is going to be some problem.". i.e. if people learn something about what the sellers are doing, they will screw these sellers obviously by stop buying. So, no buying, no selling and hence no profit.

Does that make sense?

P.S: I solved a CR question after a month and it really feels good. I will be back to help GMAT community soon.

Hi Abhimanha,

Are you sure about below statement?
"
Note that Author said "Guys, they will make profits despite whatever they are doing.". This means author is assuming the people siting on the other side to buy these things are stupid.
"

Author is just assuming these party are benefited because of trade of quality they posses. Author isn't assuming the people are stuid i.e. these parties are fooling customer by barter trade.

Sorry for asking more question but have to be clear with concept . Hope this is alright
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14 Oct 2017, 09:34
pratik1709 wrote:

Hi abhimahna,

Are you sure about below statement?
"
Note that Author said "Guys, they will make profits despite whatever they are doing.". This means author is assuming the people siting on the other side to buy these things are stupid.
"

Author is just assuming these party are benefited because of trade of quality they posses. Author isn't assuming the people are stuid i.e. these parties are fooling customer by barter trade.

Sorry for asking more question but have to be clear with concept . Hope this is alright

Hey pratik1709 ,

No issues. Ask me 100s of questions. I am happy to help.

So, here I go.

The whole argument is saying they are using the name of a one brand(may be big? ) to sell other items(may be of low quality). That means I am selling my local beer under the name of King Fisher and I am able to make people fool.

Try to understand one thing: Profit will come into picture only when customers are willing to buy the product. So, if they know this wrong thing is going on, why would they buy the product?

Does that make sense?
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14 Oct 2017, 09:48
abhimahna wrote:
pratik1709 wrote:

Hi abhimahna,

Are you sure about below statement?
"
Note that Author said "Guys, they will make profits despite whatever they are doing.". This means author is assuming the people siting on the other side to buy these things are stupid.
"

Author is just assuming these party are benefited because of trade of quality they posses. Author isn't assuming the people are stuid i.e. these parties are fooling customer by barter trade.

Sorry for asking more question but have to be clear with concept . Hope this is alright[/quote

Hey pratik1709 ,

No issues. Ask me 100s of questions. I am happy to help.

So, here I go.

The whole argument is saying they are using the name of a one brand(may be big? ) to sell other items(may be of low quality). That means I am selling my local beer under the name of King Fisher and I am able to make people fool.

Try to understand one thing: Profit will come into picture only when customers are willing to buy the product. So, if they know this wrong thing is going on, why would they buy the product?

Does that make sense?

Hi Abhimanha,

But where is in argument, they mention that by doing this activity, they are fooling people.

Designer : As he doesnt have require brand name to sell his product , he is using name of seller. " whether product good/bad.. we dont know"
Seller: They are benefited from selling those product.

There is no info in the argument about Product Quality/Degraded product. They are simply trading. And because of this trading, will this affect People purchasing behaviour?-- we are not so sure about it.
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14 Oct 2017, 09:59
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pratik1709 wrote:

Hi Abhimanha,

But where is in argument, they mention that by doing this activity, they are fooling people.

Designer : As he doesnt have require brand name to sell his product , he is using name of seller. " whether product good/bad.. we dont know"
Seller: They are benefited from selling those product.

There is no info in the argument about Product Quality/Degraded product. They are simply trading. And because of this trading, will this affect People purchasing behaviour?-- we are not so sure about it.

Okay. Let me ask you one thing.

How can I get profit by just joining my product name with another brand name?

Let me elaborate my example:

I have a product A.

There is another brand B, which is of high quality.

Obviously, my brand name is of low quality then only I will say your brand is high quality brand (Otherwise why would I say another high quality bran).

High Quality is getting revenue from the other one. Okay Profit.

Low/below high Quality is selling its product with the brand name of High Quality.

Let's say earlier they were selling 100 products.

Now, after taking high quality brand name, (even if you are assuming they are selling those 100 or more to their customers), there is a hidden assumption that the quantity sold is not decreased. That means you are saying people who were buying this product earlier will continue to buy this product.

That's what option B is saying.

If people know what is happening and they say We are not going to continue, there is going to be a LOSS.

I hope I made my point now.
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14 Oct 2017, 10:34
abhimahna wrote:
pratik1709 wrote:

Hi Abhimanha,

But where is in argument, they mention that by doing this activity, they are fooling people.

Designer : As he doesnt have require brand name to sell his product , he is using name of seller. " whether product good/bad.. we dont know"
Seller: They are benefited from selling those product.

There is no info in the argument about Product Quality/Degraded product. They are simply trading. And because of this trading, will this affect People purchasing behaviour?-- we are not so sure about it.

Okay. Let me ask you one thing.

How can I get profit by just joining my product name with another brand name?

Let me elaborate my example:

I have a product A.

There is another brand B, which is of high quality.

Obviously, my brand name is of low quality then only I will say your brand is high quality brand (Otherwise why would I say another high quality bran).

High Quality is getting revenue from the other one. Okay Profit.

Low/below high Quality is selling its product with the brand name of High Quality.

Let's say earlier they were selling 100 products.

Now, after taking high quality brand name, (even if you are assuming they are selling those 100 or more to their customers), there is a hidden assumption that the quantity sold is not decreased. That means you are saying people who were buying this product earlier will continue to buy this product.

That's what option B is saying.

If people know what is happening and they say We are not going to continue, there is going to be a LOSS.

I hope I made my point now.

umm.. agreed now..i guess you are right.

sorry for stretching this too much . Actually I wanted to be clear with " how far options are allowed to stretch" and so had to discuss this much.

Again Big thank you for clarifying my doubts to this extent.
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17 Oct 2017, 11:26
Can anyone please explain why option E is incorrect?

Thank You!
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18 Oct 2017, 05:47
csaluja wrote:
Can anyone please explain why option E is incorrect?

Thank You!

Hey csaluja ,

Here is the catch. You are NOT allowed to break the premise of any conclusion ever on GMAT CR questions.

We need to weaken only the conclusion, not the premise.

Now, our conclusion is saying one company is using the brand name of another company to sell its products and both are getting the profits.

That means premise is another company is selling the products and the first company is selling via this company's route.

Now, E said sellers of the 2nd company doesn't know how to sell. This means you are saying the premise itself is wrong. Hence, E is out.

Does that make sense?
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