Topic:
The following appeared in a memo from the regional manager of Luxe Spa, a chain of high-end salons.
"Over 75% of households in Parksboro have Jacuzzi bathtubs. In addition, the average family income in Parksboro is 50% higher than the average, and a local store reports record-high sales of the most costly brands of hair and body care products. With so much being spent on personal care, Parksboro will a profitable location for a new Luxe Spa - a salon that offers premium services at prices that are above average."
Response:
The regional manager of Luxe Spa is providing an argument that is seriously flawed and is not appropriately supported by evidences.
Firstly, the manager points out that, according to a local store, there are record-high sales of most costly hair and body care products. This could be evidence that the people in Parksboro spend a lot on personal care but they like to do it themselves. If such is the case, the salon will not be profitable in Parksboro. The manager here assumes that the amount that people spend now on buying the products will later be spent on the salon.
Secondly, the manager says that the average income of Parksboro is 50% higher than the national average. However, unless there are actual figures as per the average income in Parksboro and the amount spent on high end spa, we cannot say that the people will have enough money to spend on a high end spa. Also, if the average national income is very low, then a 50% higher average income might not indicate a very high level of income.
Thirdly, the manager says that Luxe Spa shall provide premium services at above average prices. This strategy will only work if the residents of Parksboro are ready to pay above average prices. Inspite of buying expensive personal care products, they could be conservative when spending on services. So, the mindset of the people has to be taken into account.
Also, the manager fails to provide good evidence in support of the salon. A study of the spending pattern of residents of Parksboro on services provided by salons in the place would have provided an appropriate example of the spending culture in the place. Based on the results, a safe conclusion can be made if the people in Parksboro can afford to and are willing to pay for services.
Finally, the argument is poorly reasoned with many assumptions that require clarification. Also, it lacks the presence of strong evidence in support of opening Luxe Spa.
The following appeared in a memo from the regional manager of Luxe Spa, a chain of high-end salons.
"Over 75% of households in Parksboro have Jacuzzi bathtubs. In addition, the average family income in Parksboro is 50% higher than the average, and a local store reports record-high sales of the most costly brands of hair and body care products. With so much being spent on personal care, Parksboro will a profitable location for a new Luxe Spa - a salon that offers premium services at prices that are above average."
Response:
The regional manager of Luxe Spa is providing an argument that is seriously flawed and is not appropriately supported by evidences.
Firstly, the manager points out that, according to a local store, there are record-high sales of most costly hair and body care products. This could be evidence that the people in Parksboro spend a lot on personal care but they like to do it themselves. If such is the case, the salon will not be profitable in Parksboro. The manager here assumes that the amount that people spend now on buying the products will later be spent on the salon.
Secondly, the manager says that the average income of Parksboro is 50% higher than the national average. However, unless there are actual figures as per the average income in Parksboro and the amount spent on high end spa, we cannot say that the people will have enough money to spend on a high end spa. Also, if the average national income is very low, then a 50% higher average income might not indicate a very high level of income.
Thirdly, the manager says that Luxe Spa shall provide premium services at above average prices. This strategy will only work if the residents of Parksboro are ready to pay above average prices. Inspite of buying expensive personal care products, they could be conservative when spending on services. So, the mindset of the people has to be taken into account.
Also, the manager fails to provide good evidence in support of the salon. A study of the spending pattern of residents of Parksboro on services provided by salons in the place would have provided an appropriate example of the spending culture in the place. Based on the results, a safe conclusion can be made if the people in Parksboro can afford to and are willing to pay for services.
Finally, the argument is poorly reasoned with many assumptions that require clarification. Also, it lacks the presence of strong evidence in support of opening Luxe Spa.
Last edited by Rezinka on Thu May 12, 2011 9:41 pm, edited 2 times in total.
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