Question
The following appeared in an announcement issued by the publisher of The Mercury, a weekly newspaper:
“Since a competing lower-priced newspaper, The Bugle, was started five years ago, The Mercury’s circulation has declined by 10,000 readers. The best way to get more people to read The Mercury is to reduce its price below that of The Bugle, at least until circulation increases to former levels. The increased circulation of The Mercury will attract more businesses to buy advertising space in the paper.”
Discuss how well reasoned . . . etc.
Answer
Surviving in today's competitive world is a difficult task. Companies apply different strategies to achieve profit and to stay ahead in the competition. The publisher of The Mercury is suggesting that price of the newspaper should be reduced. But after detail analysis of above statement I don't think mentioned strategy is the best one. I think more data and numerical figures are required to make statement more strong and convincing.
First of all, the publisher says that since the start of The Bugle, circulation of The Mercury has reduced by 10000. But he fails to provide evidence that will prove that the decline was due to arrival of The Bugle only. It could be that city's population reduced significantly in last few years and that caused reduction in sales. Or actual cause of decline could be some other newspaper which has better quality news but same price as of The Mercury.
Secondly, the editor says that the best way to get more people to read The Mercury is to reduce the price. But he hasn't backed his suggestion by sufficient evidence. For example it could be that people in city are expecting to read better quality news or news on some different topics and The Mercury is not meeting that expectation. In that case reducing price will not boost sales. In fact, it will affect companies profit significantly. Moreover even if we assume that people really want price reduction, then also the author hasn't provided data about how company is going to survive price cut. If time taken to reach increased circulation level is long then price cut could affect companies profit significantly and without profit it is hard to survive for long time. Ultimately it can cause the company to shut down. The author needs to provide data about how long it will take to reach earlier circulation limits.
Moreover, the author also needs to back up his claim that increased circulation will attract more advertising space and more advertising space will generate more revenue. The increased revenue should be big enough to meet the loss occurred by price cut. For example, if advertising fee/rent is high then chances are that even if more businesses get attracted toward The Mercury, businesses won't buy any space. Or revenue generated by more advertising space is less than loss occurred due to reduced price. In short, company could occur loss even if more businesses get attracted towards the paper.
In summary, I think that the author needs to provide more data to make his statements strong and more convincing. Data as mentioned in earlier paragraphs will enable readers to take better decision.
The following appeared in an announcement issued by the publisher of The Mercury, a weekly newspaper:
“Since a competing lower-priced newspaper, The Bugle, was started five years ago, The Mercury’s circulation has declined by 10,000 readers. The best way to get more people to read The Mercury is to reduce its price below that of The Bugle, at least until circulation increases to former levels. The increased circulation of The Mercury will attract more businesses to buy advertising space in the paper.”
Discuss how well reasoned . . . etc.
Answer
Surviving in today's competitive world is a difficult task. Companies apply different strategies to achieve profit and to stay ahead in the competition. The publisher of The Mercury is suggesting that price of the newspaper should be reduced. But after detail analysis of above statement I don't think mentioned strategy is the best one. I think more data and numerical figures are required to make statement more strong and convincing.
First of all, the publisher says that since the start of The Bugle, circulation of The Mercury has reduced by 10000. But he fails to provide evidence that will prove that the decline was due to arrival of The Bugle only. It could be that city's population reduced significantly in last few years and that caused reduction in sales. Or actual cause of decline could be some other newspaper which has better quality news but same price as of The Mercury.
Secondly, the editor says that the best way to get more people to read The Mercury is to reduce the price. But he hasn't backed his suggestion by sufficient evidence. For example it could be that people in city are expecting to read better quality news or news on some different topics and The Mercury is not meeting that expectation. In that case reducing price will not boost sales. In fact, it will affect companies profit significantly. Moreover even if we assume that people really want price reduction, then also the author hasn't provided data about how company is going to survive price cut. If time taken to reach increased circulation level is long then price cut could affect companies profit significantly and without profit it is hard to survive for long time. Ultimately it can cause the company to shut down. The author needs to provide data about how long it will take to reach earlier circulation limits.
Moreover, the author also needs to back up his claim that increased circulation will attract more advertising space and more advertising space will generate more revenue. The increased revenue should be big enough to meet the loss occurred by price cut. For example, if advertising fee/rent is high then chances are that even if more businesses get attracted toward The Mercury, businesses won't buy any space. Or revenue generated by more advertising space is less than loss occurred due to reduced price. In short, company could occur loss even if more businesses get attracted towards the paper.
In summary, I think that the author needs to provide more data to make his statements strong and more convincing. Data as mentioned in earlier paragraphs will enable readers to take better decision.
