Group #2: Analysis of Argument
Davis Technologies, a computer-chip maker, could solve its problem of declining sales by dropping its prices. This would make Davis better able to compete in the highly competitive computer chip market. The sales of chips would increase and this would substantially boost Davis' market share.
Describe how well reasoned you find this argument. In the discussion be sure to analyze the line of reasoning and the use of evidence in the argument. For example, you may need to consider what questionable assumptions underlie the thinking and what alternative explanations or counterexamples might weaken the argument's conclusion. You may also address possible changes in the argument that would make it more logically sound, and what, if anything, would help you better evaluate its conclusion.
The argument that Davis Technologies can improve its computer-chip revenue by dropping selling price omits some some important concerns that must be addressed to substantiate the statement. To boost a company's market share in highly competitive computer chip industry, more factors need to be considered. Average selling price alone does not constitute a logical argument in favor of the sales increase and it certainly does not provide support of proof of the main argument.
First, one has to factor in the technological aspect of a chip product besides its selling price. Consumers benchmark a chip performance against other competitors when make a purchase. If Davis Technologies's chip is sold at low price but inferior in quality, educated consumers will not favor the product. One of the best examples is microprocessor produced by technology bellwether, Intel. The average selling price of Intel chip has been favoringly higher than its main competitor, AMD. However, Intel has managed to maintain a 80% market share in computer chip industry due to its technology leadership.
Second, dropping selling price to improve sales of chips could imply Davis Technologies low confidence in product quality. Empirical studies show that consumers developed impression a cheap product is not built to last long, thus it is priced lower. If consumers perceive excessive price drop as a sign of Davis's desperation, the result would be lower sales volume rather than bigger market share.
Third, one has to weigh the impact of brand name when evaluating a technology company. If historically, Davis Technologies has built up its reputation as one of the best computer-chip makers in the industry, it can actually sell chips at a premium compared to its competitors. With a strong brand name, Davis can outclass its competitor easily without lowering the selling price. This phenomena is abundantly observable in technology industry, such as Apple with its iPod and iPhone offerings, which are priced at premium due to superior brand strategy.
Because the argument leaves out several key issues, it is not sound or persuasive. If it included the items discussed above instead of solely relying on selling price to boost market share, the argument would have been more thorough and convincing.
Davis Technologies, a computer-chip maker, could solve its problem of declining sales by dropping its prices. This would make Davis better able to compete in the highly competitive computer chip market. The sales of chips would increase and this would substantially boost Davis' market share.
Describe how well reasoned you find this argument. In the discussion be sure to analyze the line of reasoning and the use of evidence in the argument. For example, you may need to consider what questionable assumptions underlie the thinking and what alternative explanations or counterexamples might weaken the argument's conclusion. You may also address possible changes in the argument that would make it more logically sound, and what, if anything, would help you better evaluate its conclusion.
The argument that Davis Technologies can improve its computer-chip revenue by dropping selling price omits some some important concerns that must be addressed to substantiate the statement. To boost a company's market share in highly competitive computer chip industry, more factors need to be considered. Average selling price alone does not constitute a logical argument in favor of the sales increase and it certainly does not provide support of proof of the main argument.
First, one has to factor in the technological aspect of a chip product besides its selling price. Consumers benchmark a chip performance against other competitors when make a purchase. If Davis Technologies's chip is sold at low price but inferior in quality, educated consumers will not favor the product. One of the best examples is microprocessor produced by technology bellwether, Intel. The average selling price of Intel chip has been favoringly higher than its main competitor, AMD. However, Intel has managed to maintain a 80% market share in computer chip industry due to its technology leadership.
Second, dropping selling price to improve sales of chips could imply Davis Technologies low confidence in product quality. Empirical studies show that consumers developed impression a cheap product is not built to last long, thus it is priced lower. If consumers perceive excessive price drop as a sign of Davis's desperation, the result would be lower sales volume rather than bigger market share.
Third, one has to weigh the impact of brand name when evaluating a technology company. If historically, Davis Technologies has built up its reputation as one of the best computer-chip makers in the industry, it can actually sell chips at a premium compared to its competitors. With a strong brand name, Davis can outclass its competitor easily without lowering the selling price. This phenomena is abundantly observable in technology industry, such as Apple with its iPod and iPhone offerings, which are priced at premium due to superior brand strategy.
Because the argument leaves out several key issues, it is not sound or persuasive. If it included the items discussed above instead of solely relying on selling price to boost market share, the argument would have been more thorough and convincing.
