GMAT Essays (AWA)

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.

MY RESPONSE:
The conclusion drawn in the memorandum to offer price reductions on all drinks produced by the firm in the light of increased sales of the energy drinks due to price reductions seems flawed and based on many assumptions which have not been discussed. I will discuss the flaws and assumptions which lead to the debilitation of the stated argument.

The evidence cited in the memorandum brings into question the basic premise on which the increase in unit sales is based. The increase in unit sales could be linked to other factors related to the dynamic consumer market. For instance, a competitor withdrawing its range of energy drinks from the market could be one of the reason for increase cited in the memorandum. In the same vein of thought, the supply-demand mechanics of the market could also be a pivotal reason for the sales increase.

In addition to the above factor, the author fails to provide data to substantiate the popularity of other drinks. As may be the case, other drinks from the same manufacturer do not command the same popularity with the consumers. In such a scenario, a price reduction offered on other drinks may not necessarily guarantee increased sales. A noteworthy example here would be the discount offers brought out by Maruti Suzuki, an Indian car manufacturer, on all their models. The offering was not a major success for Maruti as far as the Saloon models were concerned. However, Maruti saw an increase in the sales of small-segment, which indicates the popularity of that particular segment from Maruti with the consumers

The memorandum cites the customer survey as the evidence of the campaign being well received by the customers. However, there is no information provided of the customer base surveyed. It could be possible that the results of the survey are skewed if a large number of customers, who prefer the manufacturer's brand of energy drinks, was surveyed.

In sum, the memorandum fails to provide enough justifications for its claims to be irrefutable. It based largely on assumptions which hamper the authenticity of the claims. The author could have done well to provide clarification on the underlying assumptions and provide data to substantiate all its claims.


Thanks.

- rd