GMAT Essays (AWA)

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

The beverage manufacturer is flawed to conclude that increase in sales due to success of promotional policy will be replicated by adopting the strategy in general. It is a mistaken assumption that increases in sales will be complemented by increase in profit. The entire argument hinges on a false premise with the outcome precariously hanging by the thread.
First of all, the manager does not divulge the sales figures with which he is comparing the present sales. What if it was drastically poor in the previous years or weaker than its competitors, then the "dramatic rise" as quoted by the manager could be undermined. Maybe it was never exceptional. The manager should have substantiated his claims by providing the sales figures.
Secondly, he uses the survey to strengthen his claim that the promotional policy was successful. However, the sample of the survey may be small or unrepresentative of customers. Although the respondents may have liked the campaign, it cannot be assured that it translated into high sales. The promotion may have used a star to campaign to promote its product or a gift hamper or discounts may have caused the respondents to favorably receive it. Until the method of the survey, the size of the sample is discussed, it is difficult to assume that the survey supports the sales.
Thirdly, it is erroneous to conclude that by adopting a similar strategy the company can increase its profits. He does not take into account the costs incurred or the revenue generation of other products. If the sales of a product are satisfactory, then there is no requirement to enhance its sales. The company can invest its time and effort in other products. He could have provided the revenue model of the promotional products and whether the model could be standardized for other products. Further, he could have strengthened his reasoning by providing information regarding the similarity of products and under what situation they were facing headwinds. If the situation was similar, maybe the policy provides an impetus to its sales or clears some misconception about the products.