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Khaled Alzahrani	FREE GMAT Exam	10/16/2008

AWA ESSAYS: Analyze Argument

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 idea of reducing the price of drinks and the relation of profit associated with this change is logically up to a certain level depending the perception of the end consumers on product prices , nature of consumers and of course volume of sales V.S. unit prices. the result of the promotional prices on having a dramatics increase in unit sales and therfore having more profit cannot be generalized since that the consumer of Energy drinks are usually Sport epople or could be called a special Interset People whcih is not the case with consumers of all firm`s products. people are different and how they look to things are also different; so some people may see the reduced price attractive and decide to pay the product and some other people may perceive it an indication that producing firm is challenged by other better drink firm and accordingly are trying to keep the consumers loyal to their product. Also some people may think of the low price drinks as low quality products because of using low cost ingredeients. another point to consider is, the competitor prices ; as it is an optimization problem ,we should consider the unit sales and unit price.For example company X could be selling more drinks than companu Y but company Y are making more money than company X.