GMAT Essays (AWA)

"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."

RESPONSE:
While the promotional price reductions on energy drinks have been successful, the argument that the company's profitability through similar price reductions on all drinks produced is not well reasoned. The argument is currently structured to reveal as little information as possible to support the point that is being made. In order for a company to believe that there is a great scope for profitability through promotional price reductions, more information must be provided for the company to take a well informed stance in favour of the argument.

Firstly, there are several questions that are left unanswered in this argument: namely, what was the time frame for the promotional offer, is the success of one drink a guarantee that all drinks will prove to be just as profitable during such sales, do people favour the drink or the price reduction etc. Such questions will provide a better context for the successful price reduction promotion. For example, if people favour the price reduction and not the drink, then seasons when the drink is not on a promotional price will suffer losses. However, if people love the drink, then the price reductions help sell more of the product and during off-season, the product's sales will not suffer.

Secondly, in suggesting that the promotion will improve the company's profitability through price reductions on all drinks, a dangerous assumption is being made. The assumption that one drink's success will dictate that of the others' is not supported by any evidence and is based on a trend seen only once. If the company chooses to place all drinks on reduced prices and profits are not made, then the company will be unable to deal with the negative repercussions that will follow. Additionally, the author is also making assumptions about the reasons why customers received the promotion well. If customers receive the promotion favourably, then it does not mean that they receive the product favourably. While it can be a safe assumption to make that the favourability of the promotion also means that the product is well received, the suggestion for the company to apply this strategy to all productions might not benefit for this assumption. The company could potentially get affected by such an assumption because the increases the margin for error. In order for the company to apply this strategy, the argument should have discussed analyses, facts and figures as evidence to show that the promotion has merit to be applied to all drinks. For example, a recent survey illustrated that more customers (60%)like our products but are unable to afford them so this promotion will enable people to buy our products at a cheaper price but still ensure that our company remains profitable. Such example help add to the argument and provide a more convincing account as to why the suggestion made should be heeded.

Therefore, the argument constructed was succinct but incomplete. In order for the company to consider this suggestion, the author needed to provide compelling evidence and ensure that no assumptions were without proof. Furthermore, if the author set out to outline the assumptions made and provide support that making these assumptions were safe, then the argument presented would have been more powerful.