First, the marketing department assumes that if the company discontinues the new deluxe air filter, customers will resume buying its economy filter. This assumption may not be correct. Customers who prefer the deluxe model may do so because it requires replacement less often. Thus, instead of buying the companys economy filters again, these customers may just as likely turn to a competitor for a product similar to the deluxe model. In this event, the result would be lower profits.
Secondly, the marketing department fails to recognize alternative strategies that might enhance profits more than discontinuing the deluxe filter would. It is possible that lowering the price of the economy model, raising the price of the deluxe model, or both, may actually maximize profits. A lower-priced economy filter might lure customers from competing products and retain current customers. At the same time, buyers of the deluxe model may place a premium value on its convenience and may be willing to pay an even higher price for the filter.
Thirdly, the marketing department unfairly assumes that the availability of its deluxe filter is the cause of decreasing profits. It is equally possible that other factors, such as increased competition or supply prices, or decreased demand for these kinds of filters generally, are responsible for the decrease in profits. If so, discontinuing the deluxe filter may not serve to maximize, or even enhance, the companys profits.
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