GMAT Essays (AWA)

WA 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.

MY RESPONSE:

The argument support the idea that company profitability and clients' perception can be increased by offering similar price reductions to all products as was the case for the energy drinks. Although the statement seems to provide a logical interpretation of the law of supply and demand, it nevertheless fails to offer well substantiated evidence and to reasonably explicate the underlying assumptions.

The argument primarily states that the price reduction lead to an increase in the number of units sold. However, it did mention that this generated higher profits. As a secondary aspect, the author does not provide a clear description of the way in which the survey was conducted, how many clients were surveyed, what was the sample size or what type of products they prefer in order to generate a solid argumentation basis for the increased customer perception.

In addition, the argument relies on several assumptions which are not properly explained and can mislead the readers in their evaluation of the conclusion. First, the author implies that all price reductions can lead to increase profitability and clients' perception. However, it is false to take this assumption as true as there are other variables to be analyzed when conducting a profitability analysis. These can be aspects such as variable and fixed cost structures, pricing models demand volatility for the products or other competitive products and prices. Second, even if the increase numbers in energy drinks were profitable, we cannot know from the paragraph that such actions would have the same effects in the case of the other products which have different characteristics, serve different clients, have other substitute products and generate other costs.

In sum, if the argument considered the above mentioned aspects a more solid evidence basis and a stronger argumentation would be provided which would make the conclusion more credible for us. Without the additional information regarding the premises and clear explication of how the assumptions were made this paragraphs remains a plain unjustified opinion.