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Expert replies
by amysky_0205 » Sat Dec 08, 2012 10:30 pm
Manufacturers sometimes discount the price of a product to retailers for a promotion period when the product is advertised to consumers. Such promotions often result in a dramatic increase in amount of product sold by the manufacturers to retailers. Nevertheless, the manufacturers could often make more profit by not holding the promotions.

Which of the following, if true, most strongly supports the claim above about the manufacturers' profit?

(A) The amount of discount generally offered by manufacturers to retailers is carefully calculated to represent the minimum needed to draw consumers' attention to the product.

(B) For many consumer products the period of advertising discounted prices to consumers is about a week, not sufficiently long for consumers to become used to the sale price.

(C) For products that are not newly introduced, the purpose of such promotions is to keep the products in the minds of consumers and to attract consumers who are currently using competing products.

(D) During such a promotion retailers tend to accumulate in their warehouses inventory bought at discount; they then sell much of it later at their regular price.

(E) If a manufacturer falls to offer such promotions but its competitor offers them, that competitor will tend to attract consumers away from the manufacturer's product.

OA: D

I would like to ask C. can someone explain?

thank u !!
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Source: — Critical Reasoning |

by Kasia@EconomistGMAT » Tue Dec 11, 2012 7:23 am
Let's analyze the argument:

Premise 1 - the product is sometimes made cheaper during a promotion period
Premise 2 - the result is often a dramatic increase in amount of product sold
Conclusion - (not supported directly by the premises) the manufacturers could make more money by simply not decreasing the price of the product for a promotion period

Answer C does not strengthen the claim that not holding the promotions could bring more profit. This choice does not offer any explanation why selling a lot of product at a lower price would be less profitable than selling the usual amount at the regular price. Answer C tells us why promotions are useful to advertise products that are not newly introduced. So this choice basically shows that promotions are an effective marketing tool.
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by sri_r » Mon Dec 17, 2012 5:47 am
Hi Kasia,

Could you explain how D is the correct option and not option B? It talks about the retailer's profit but the question is a reason supporting manufacturer's profit.

Kasia@EconomistGMAT wrote:Let's analyze the argument:

Premise 1 - the product is sometimes made cheaper during a promotion period
Premise 2 - the result is often a dramatic increase in amount of product sold
Conclusion - (not supported directly by the premises) the manufacturers could make more money by simply not decreasing the price of the product for a promotion period

Answer C does not strengthen the claim that not holding the promotions could bring more profit. This choice does not offer any explanation why selling a lot of product at a lower price would be less profitable than selling the usual amount at the regular price. Answer C tells us why promotions are useful to advertise products that are not newly introduced. So this choice basically shows that promotions are an effective marketing tool.
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by Sapana » Sat Dec 22, 2012 9:18 pm
I dont get the answer. the retailers bought the items in stack only because they were advertised/below reg price . In the last sentence of the passage it says, if the manufacturer had not ADVERTISED, they would have more profit. But if they did not promote, would the retailers have bought the items in stacks. i doubt that, this is the reason I eliminated that answer. please somebody enlighten me!!
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