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.
YOUR RESPONSE:
The Argument above that the reduction of Prices to be offered to all the products to increase the Sales is not well-reasoned and flawed.
First, The Price reductions on Energy Drinks has been a hit in the Market and got well-recognized by the Consumers. The Price-reduction was promotional to promote the Energy drink to Market. This is usually done while launching the Product , the same cannot be done for a Product which has been in Market for years. Reducing the Cost of certain drink in the current Market would give a false impression that the Quality of the Product has been compromised, which again would affect the sales adversely.
Second, as per the Statement above, the surveys conducted shows the Consumers have encouraged the Price-reduction this could be because the Market Price of the Energy Drink could have been high compared to other Energy Drinks in the Market which could have affected its sales. So what applies in Energy Drink market could not be successful in Fruit Drinks or Fizz Drinks.This is a complete fallacy that what applies to one applies to all.
Thirdly, the success of the Energy-drink price reduction may not have been due to the Price reduction alone. There could have been other factors too like Marketing and Advertisements which could have promoted the Drink.Before we conclude that Price reduction is the cause for increased perception of the product in the Consumer's vision other factors has to be taken into account and analyzed thoroughly.
Finally, the Company's Profitability is directly impacted by sales which is true. But this is specific to a Product.For Instance, say for Energy Drink the Company has been trying to do all sorts of Marketing and failed and so after all attempts adopted the Price-reduction strategy this could not be applied to other Drinks too. The Profitability of other Drinks would be worsened if the Profit Margin is low on them and a further price-reduction on its market price would not compensate for its manufacturing expenses which would result in loss and affects the Profitability negatively.
So in conclusion, the generalization that reduction in Price on all Drinks because it was successful in promoting Energy Drinks to improve the Firm's Profitability is not well-substantiated. If various mentioned factors and more Survey Information on the concerned specifics had been mentioned then the Argument could be well-reasoned.
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.
YOUR RESPONSE:
The Argument above that the reduction of Prices to be offered to all the products to increase the Sales is not well-reasoned and flawed.
First, The Price reductions on Energy Drinks has been a hit in the Market and got well-recognized by the Consumers. The Price-reduction was promotional to promote the Energy drink to Market. This is usually done while launching the Product , the same cannot be done for a Product which has been in Market for years. Reducing the Cost of certain drink in the current Market would give a false impression that the Quality of the Product has been compromised, which again would affect the sales adversely.
Second, as per the Statement above, the surveys conducted shows the Consumers have encouraged the Price-reduction this could be because the Market Price of the Energy Drink could have been high compared to other Energy Drinks in the Market which could have affected its sales. So what applies in Energy Drink market could not be successful in Fruit Drinks or Fizz Drinks.This is a complete fallacy that what applies to one applies to all.
Thirdly, the success of the Energy-drink price reduction may not have been due to the Price reduction alone. There could have been other factors too like Marketing and Advertisements which could have promoted the Drink.Before we conclude that Price reduction is the cause for increased perception of the product in the Consumer's vision other factors has to be taken into account and analyzed thoroughly.
Finally, the Company's Profitability is directly impacted by sales which is true. But this is specific to a Product.For Instance, say for Energy Drink the Company has been trying to do all sorts of Marketing and failed and so after all attempts adopted the Price-reduction strategy this could not be applied to other Drinks too. The Profitability of other Drinks would be worsened if the Profit Margin is low on them and a further price-reduction on its market price would not compensate for its manufacturing expenses which would result in loss and affects the Profitability negatively.
So in conclusion, the generalization that reduction in Price on all Drinks because it was successful in promoting Energy Drinks to improve the Firm's Profitability is not well-substantiated. If various mentioned factors and more Survey Information on the concerned specifics had been mentioned then the Argument could be well-reasoned.
