This argument was interesting. I hope I didn't miss out.

[megha6788]

I wrote the analysis of below argument. I hope it covered all points. Can someone please evaluate it? Any help will be really appreciated.

"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."



Analysis -

The argument above discusses the profit projections of a certain energy drink by offering the drink at reduced prices. This promotional strategy was well received by its customers and hence resulted in increased sales.
Hence the argument is strongly supportive of the strategy of price reduction and plans to implement the same for rest of the drinks manufactured by company. However, while making this decision, it assumes below facts -

1. Reduction in prices of energy drink did not cut on profits of energy drinks and was low enough to recover manufacturing costs atleast.

2. Company's perception or brand image is directly related to its sales.

3. Price reductions in other products will be as successful as for this product and will not cut in profit margins of the company.

Lets discuss some flaws with these assumptions. For assumption 1, if it is proved that reduction of prices in energy drink was so high as to cut in profit margins or inspite of increased sales, company could just recover manufacturing costs or failed to do even that , then this will weaken the argument's conclusion entirely.
Also, While assuming that company's better image perception results from higher sales, the argument assumes that people who purchase company's product develop a good perception of the company. It however can also be the case that lower cost of energy drink is the sole reason for its sales and the its quality is comparable or less than other products in the market. If one of these product follows same price reduction strategy, and if it is found that most customers of energy drink company drift away from the company, then that proves that company failed to develop a good brand image and instead was selling only because of low prices.

Consider the third assumption, the argument concludes, that price reduction in other drinks will bring in similar responses as for the energy drink. This however is flawed, considering that there might be other drinks of those catagories in market with fairly low prices and that can render price reduction strategy useless due to enormous competition. Also, it assumes that reducing prices for other drinks will not cut in company's profit and company will still make substantial amount from selling them at these prices.

Thus,if any of the underlying assumptions of the argument is found incorrect, the argument above will fail to deliver its proposed conclusion.