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CR - Strengthening question using general principle

Expert replies
by karthikpandian19 » Thu Jul 12, 2012 7:25 pm
Often, during a period of promotion in which a product is heavily marketed directly to consumers, companies offer discounts to both consumers and retailers to stimulate sales. Despite the significant short-term gains in sales that are usually sparked by such promotions, companies could generally make more profit without such discounts.

Which of the following, if true, most strongly supports the claim above?


(A) The companies already offer the smallest possible discounts that are still large enough to boost sales.

(B) The discounts generally last for very short periods of time, preventing consumers from becoming accustomed to the lower prices.

(C) The discounts can apply not only to new products but to more established ones as well, in order to draw customers away from competitors.

(D) The biggest beneficiaries of such discounts are generally retailers, who can keep the merchandise in stock until the price rises again and resell it for a significant profit.

(E) Companies who fail to respond in kind when their competitors offer promotional discounts often lose customers as a result.
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Source: — Critical Reasoning |

by Bill@VeritasPrep » Thu Jul 12, 2012 7:59 pm
Conclusion: Companies would make more profit without heavily-marketed promotions offering discounts.

A--still involves using discounts to stimulate sales

B--correct; if consumers do not become used to lower prices, then they will be more willing to pay the regular price. The company makes more when a product is bought at the regular price than when it is bought at the discounted price.

C--gives a reason that discounts could lead to more profit

D--irrelevant; we are not concerned with the profits of retailers

E--weakens by showing how companies could lose money without discounts
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by anjalimanas » Sat Aug 11, 2012 11:15 am
Hello, one clarity required here - (B) suggests that discounts are short term and consumers will get back to paying regular pricing - that means the companies will not hurt their profits in longer term. this option thus seems to be supporting the discounts. Kindly help
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by patanjali.purpose » Sun Aug 12, 2012 12:57 am
anjalimanas wrote:Hello, one clarity required here - (B) suggests that discounts are short term and consumers will get back to paying regular pricing - that means the companies will not hurt their profits in longer term. this option thus seems to be supporting the discounts. Kindly help
Absolutely, IMO B supports SHORT-TERM strategy - This suggests that short-term discounts have no negative impact on long-term profits.
karthikpandian19 wrote:Often, during a period of promotion in which a product is heavily marketed directly to consumers, companies offer discounts to both consumers and retailers to stimulate sales. Despite the significant short-term gains in sales that are usually sparked by such promotions, companies could generally make more profit without such discounts.

Which of the following, if true, most strongly supports the claim above?

(B) The discounts generally last for very short periods of time, preventing consumers from becoming accustomed to the lower prices.

(D) The biggest beneficiaries of such discounts are generally retailers, who can keep the merchandise in stock until the price rises again and resell it for a significant profit.
We have to look for a choice that suggests short-term discounts are actually hurting the seller. D does it - its middlemen who gains from such discounts.

IMO D
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by karthikpandian19 » Mon Oct 08, 2012 11:21 pm
OA is B

B - We are not talking abt short term or long term here. We are discussing how will the "w/o discounts" "improve profits"....And this is the only statement which doesnt support discounts directly to profits.
whereas other statements support discounts for profits (against the concl)
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Karthik
The source of the questions that i post from JUNE 2013 is from KNEWTON

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