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Leonard C
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 Posted: Mon Dec 17, 2007 4:20 am Post subject: United Shipping |
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Because of rising costs, United Shipping Company raised its rates by ten percent last year. Many of its customers balked at the increase, however, and turned to a rival company whose rates were lower. In response, United Shipping Company began offering a package of services for a single rate that, though high, is still lower than the combined rates of the individual services. Officers of the company claim that this move will recoup the company's lost profits.
Which of the following, if true, provides the best basis for the officers' claim?
A) United Shipping will aggressively advertise the new package of services.
B) United Shipping's rival does not offer some of the services included in the package.
C) Marketing studies have shown that many of United Shipping's former customers would prefer a combined rate for their various shipping services.
D) United Shipping does not already offer all the services separately.
E) No other shipping company offers the same package of services as United Shipping.
SPOILER TO FOLLOW
The answer is C. My beef with this answer is that it is not foolproof (or at least I don't think it is). For example, what if existing customers are already using all of the services that United Shipping is including in its package? Then by offering the package, customers will buy the package paying less for each service than they originally were paying when they purchased each service separately, resulting in lower profits.
I chose D. |
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camitava
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| Posted: Mon Dec 17, 2007 5:22 am Post subject: |
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| Quote: | Because of rising costs, United Shipping Company raised its rates by ten percent last year. Many of its customers balked at the increase, however, and turned to a rival company whose rates were lower. In response, United Shipping Company began offering a package of services for a single rate that, though high, is still lower than the combined rates of the individual services. Officers of the company claim that this move will recoup the company's lost profits.
Which of the following, if true, provides the best basis for the officers' claim?
A) United Shipping will aggressively advertise the new package of services.
B) United Shipping's rival does not offer some of the services included in the package.
C) Marketing studies have shown that many of United Shipping's former customers would prefer a combined rate for their various shipping services.
D) United Shipping does not already offer all the services separately.
E) No other shipping company offers the same package of services as United Shipping. |
Leonard, I will go for C. Here is my approach -
I think u r getting a wrong idea about the option - D. D is saying that United Shipping does not already offer all the services seperately. So these services are coming in a combined package already. If it is true, then the existing customers have already moved from United Shipping to some other organization. That means the then customers were not happy with the package services of the United Shipping. This option actually weakens the officer's claim. So it can not be!
Now come to C - 1. It is a market survey. 2. Former customers like combined rate of some package services. And according to the argument, United Shipping is offering this package service with a less price than the combined cost of individual services offered by different other vendors. So this is the offer which customers will be happy to accept. So IMO C. But u can say that B is also another option which is close to chose. But C is the best option to chose. So C.
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Correct me If I am wrong
Regards,
Amitava |
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