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 above states that since a reduction in the price of energy drinks has had a positive impact on the unit sales hence, the price of all drinks should be reduced to increase profitability and to enhance the perception of the drink in the customer's eyes. This argument is extreme and highly flawed as it fails to consider various important points while arriving at a conclusion. The argument above does not provide data to substantiate the claims made, such as - the promotion being favorably received by the customers. No detail is provided with regard to the size/composition of the customers surveyed.
The argument states that since, the price reduction of the energy drinks led to an increase in unit sales, it would consequently, lead to an increase in the "profitability". This argument is illogical since, it fails to distinguish between unit sales and profitability. For example, the unit sales of a product could increase significantly, say from 10 units to 100 units. However, unless we are aware of the costs associated with the production and sale of the product, we cannot correctly determine if the product is profitable.
The argument above does not provide any information regarding the surveys conducted. It does not throw light on either a) the number of consumers in the survey, b) the age, location, and purchasing power of the consumers surveyed. The argument simply states that the promotion was favorably received by "the majority" of customers. We do not know what this "majority" was. Was it a mere 51% or a significant 80%? It might also be that the survey was conducted mostly on athletes who regularly consume such energy drinks however, the same product might not fair well in the eyes of a different group of consumers, for example: housewives. The argument should also emphasize the feedback given by the customers who were not satisfied with the promotion.
Finally, the argument illogically states that to improve the company's profitability such price reductions should be offered on all drinks produced by the firm. This argument is completely irrelevant since we are not aware of all the types of drinks produced by the firm. A particular strategy might be successful for energy drinks however, the same might not work for colas, bottled water or any other kind of drink that the firm produces. Hence, in the light of the above mentioned reasons, it is safe to say the argument is extreme, incomplete and flawed at various places.
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 above states that since a reduction in the price of energy drinks has had a positive impact on the unit sales hence, the price of all drinks should be reduced to increase profitability and to enhance the perception of the drink in the customer's eyes. This argument is extreme and highly flawed as it fails to consider various important points while arriving at a conclusion. The argument above does not provide data to substantiate the claims made, such as - the promotion being favorably received by the customers. No detail is provided with regard to the size/composition of the customers surveyed.
The argument states that since, the price reduction of the energy drinks led to an increase in unit sales, it would consequently, lead to an increase in the "profitability". This argument is illogical since, it fails to distinguish between unit sales and profitability. For example, the unit sales of a product could increase significantly, say from 10 units to 100 units. However, unless we are aware of the costs associated with the production and sale of the product, we cannot correctly determine if the product is profitable.
The argument above does not provide any information regarding the surveys conducted. It does not throw light on either a) the number of consumers in the survey, b) the age, location, and purchasing power of the consumers surveyed. The argument simply states that the promotion was favorably received by "the majority" of customers. We do not know what this "majority" was. Was it a mere 51% or a significant 80%? It might also be that the survey was conducted mostly on athletes who regularly consume such energy drinks however, the same product might not fair well in the eyes of a different group of consumers, for example: housewives. The argument should also emphasize the feedback given by the customers who were not satisfied with the promotion.
Finally, the argument illogically states that to improve the company's profitability such price reductions should be offered on all drinks produced by the firm. This argument is completely irrelevant since we are not aware of all the types of drinks produced by the firm. A particular strategy might be successful for energy drinks however, the same might not work for colas, bottled water or any other kind of drink that the firm produces. Hence, in the light of the above mentioned reasons, it is safe to say the argument is extreme, incomplete and flawed at various places.
