The following appeared in a memorandum from the ElectroWares company's marketing department:
"Since our company started manufacturing and marketing a deluxe light bulb six months ago, sales of our economy
light bulb-and company profits-have decreased significantly. Although the deluxe light bulb sells for 50 percent
more than the economy bulb, it lasts twice as long. Therefore, to increase repeat sales and maximize profits, we
should discontinue the deluxe light bulb."
Discuss how well reasoned . . . etc.
The marketing department is arguing that the recent launch of a deluxe light bulb, which lasts twice as long as its economy light bulb, is causing a decline in the economy light bulb's sales and, thus, is hurting company profits. I find the marketing department's argument weak as it draws it conclusion from weak premises and assumes many facts not actually articulated in the argument.
The first obvious assumption made by the marketing department is that the launch of the light bulb is directly responsible for the decline in sales of the economy light bulb. The reason it offers for this is that the deluxe light bulb lasts twice as long. The reader of the memorandum must assume that, whereas previously the customer would have bought two economy light bulbs, it is now only buying one deluxe light bulb which results in 25% less revenue per purchase for the company.
However, the marketing department does not offer any evidence that this is actually the case. It states that since the launch of the new deluxe light bulb, sales of the economy light bulb have decreased. It may be the case that sales of the economy light bulb are continuing to decrease at the same rate as before the launch. If the marketing department is right, it could have added in some figures showing that while the sales of economy light bulbs are declining, sales of the new product have increased.
In fact, the marketing department never actually states that the launch of the new product has been a success. For all we know the company may not have managed to sell a single light bulb. A new lightning store may have opened up next door and could be taking market share. The department concludes that discontinuing of the deluxe bulb will result in an increase in sales and profits. However, if the bulb is not the reason for the decline, but rather a new competitor, then discontinuation of the product will not lead to a recovery in profits.
The final assumption the marketing department makes is that it is the decline in sales of the economy light bulb that is causing the decline in company profits. It could be the high marketing spend which is reducing company profits. Again, if the marketing department included figures which clearly showed the cause of the decrease in profits, its argument would be better substantiated.
In conclusion, this argument rests on many assumptions and is not substantiated with much factual evidence. I would not recommend that the company discontinue its product on such weak reasoning.
"Since our company started manufacturing and marketing a deluxe light bulb six months ago, sales of our economy
light bulb-and company profits-have decreased significantly. Although the deluxe light bulb sells for 50 percent
more than the economy bulb, it lasts twice as long. Therefore, to increase repeat sales and maximize profits, we
should discontinue the deluxe light bulb."
Discuss how well reasoned . . . etc.
The marketing department is arguing that the recent launch of a deluxe light bulb, which lasts twice as long as its economy light bulb, is causing a decline in the economy light bulb's sales and, thus, is hurting company profits. I find the marketing department's argument weak as it draws it conclusion from weak premises and assumes many facts not actually articulated in the argument.
The first obvious assumption made by the marketing department is that the launch of the light bulb is directly responsible for the decline in sales of the economy light bulb. The reason it offers for this is that the deluxe light bulb lasts twice as long. The reader of the memorandum must assume that, whereas previously the customer would have bought two economy light bulbs, it is now only buying one deluxe light bulb which results in 25% less revenue per purchase for the company.
However, the marketing department does not offer any evidence that this is actually the case. It states that since the launch of the new deluxe light bulb, sales of the economy light bulb have decreased. It may be the case that sales of the economy light bulb are continuing to decrease at the same rate as before the launch. If the marketing department is right, it could have added in some figures showing that while the sales of economy light bulbs are declining, sales of the new product have increased.
In fact, the marketing department never actually states that the launch of the new product has been a success. For all we know the company may not have managed to sell a single light bulb. A new lightning store may have opened up next door and could be taking market share. The department concludes that discontinuing of the deluxe bulb will result in an increase in sales and profits. However, if the bulb is not the reason for the decline, but rather a new competitor, then discontinuation of the product will not lead to a recovery in profits.
The final assumption the marketing department makes is that it is the decline in sales of the economy light bulb that is causing the decline in company profits. It could be the high marketing spend which is reducing company profits. Again, if the marketing department included figures which clearly showed the cause of the decrease in profits, its argument would be better substantiated.
In conclusion, this argument rests on many assumptions and is not substantiated with much factual evidence. I would not recommend that the company discontinue its product on such weak reasoning.
