ESSAY QUESTION:
The following appeared in a corporate memorandum of a beverage manufacturer:
“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.”
Discuss how well reasoned you find this argument. Point out flaws in the argument's logic and analyze the argument's underlying assumptions. In addition, evaluate how supporting evidence is used and what evidence might counter the argument's conclusion. You may also discuss what additional evidence could be used to strengthen the argument or what changes would make the argument more logically sound.
MY RESPONSE:
The memorandum of a beverage manufacturer states that promotional price reductions on energy drinks led to a dramatic increase in unit sales and therefore the best way to improve profitability and increase customers' perception is to reduce price in a similar way to all other drinks.
The argument logics might be correct but some assumptions are definitely missing. First of all, the author of the argument did not specify if there is any difference between the group of customers who consume energy drinks and customers who purchase other types of beverages. There is no guarantee that people buying energy drinks wish to consume more other types of drinks even in case of discounts.
The second missing assumption I would like to outline is the correlation between profitability and increase of the unit sales of discounted goods. It can be that price reduction is not compensated by the enhanced sales volume. For example, elasticity of demand on other beverages is very low and it can lead to the failure of the price reduction strategy. So, if the author wants to prove the profitability he has to provide calculations supporting his statement.
The same I would like to tell about the correlation between brand perception and price reduction. What if beverages of this company are considered luxury goods and the whole segment of customers will be lost? To be more convincing the author should name the factors which influence on brand perception and evaluate the role of price among these factors.
Also I would like to notice that for better understanding of the memorandum it is worth disclosure precise numbers: how many percent is the "majority of customers", what is the amount of the "dramatic increase of unit sales" in dollars and percentage, what is the amount of "similar price reductions". It is always difficult to make practical inferences from the abstract information.
From the statistical point of view I would also like to see more information about surveys of customers indicating that promotional was favorably received. Were those surveys representative enough? Did the customers favorable to price reduction as to a short term sale campaign or as to a change of the sales policy? Also I would like to notice that I think that substantial decrease of prices can affect the quality of the product. Are the customers aware of that?
Also, I cannot unambiguously understand if the memorandum suggests offering price reductions as a promotional action or as a long term policy. I think that the author should be more careful with the choice of vocabulary for expression of his ideas.
Saturday, March 6, 2010
“Out of respect for individual freedom, government should impose no restrictions on an individual’s ability to wager at online casinos.”
Regulation of on-line business is relatively new because of the nature of the business itself. On-line business is extremely complicated because some the people can participate in it without revealing their identity, because it is international and because it has been changing all the time.
If the government wants to impose restrictions on the individual's ability to wager at on-line casinos it has to clarify the following details. First, the government can control only on-line casinos which are registered in the country the government belongs to. It means that citizens of the country will be able to gamble in foreign casinos without any restrictions. If the purpose of the government is to restrict a freedom of its citizens the government will not achieve it. Second, most probable that the government wants to protect only its own citizens and interested in the development of national casino business. But the restriction on an individual's ability to wafer at online casinos will lead to decrease of the profit the casinos get from the foreign citizens.
So, even from these assumptions, we understand that regulations of on-line casinos are too complicated to be implemented in the nearest future. But let's see leave the technical point of view and look if it fair to restrict a personal freedom in this way.
Of course a lot of people are ready to tell that it is unfair of the government to prohibit make big stakes in on-line casinos because it deprives people of right to manage their own money. But those people should not forget that here we are talking of on-line business which creates several times more opportunities for fraud than any other type of business. It can happen that somebody will try to use a credit card of another person for gambling, or that a grandchild will spend all the retirement money of his own grandparents. Internet has a plenty of opportunities for people who want to use the identity of another person.
Also it is difficult to control access to gambling sites. We know that there is security which can prohibit from casino some types of people because of their appearance or failure to show an ID proving that people are legally capable. It can be that some people have a gambling addiction and prohibited from the casino. But without special restrictions nothing can stop those people from performing actions they may regret.
So, I think that government or even casinos itself should impose restrictions on an individual's ability to wager at online casinos. It can be a phone call to make an identity check, a system of password and codes confirming the amount. Sometimes a small typo can lead to dramatic events. What if a person typed 1000 instead of 100? What if he accidentally presses "ok" instead of "close the window"? I think that the questions as "are you sure that you want to bet a 1000 of dollars now?" will be very useful. Also I think that the government and casinos should give people as much information about online business as possible because knowledge is the best weapon against of fraud.
If the government wants to impose restrictions on the individual's ability to wager at on-line casinos it has to clarify the following details. First, the government can control only on-line casinos which are registered in the country the government belongs to. It means that citizens of the country will be able to gamble in foreign casinos without any restrictions. If the purpose of the government is to restrict a freedom of its citizens the government will not achieve it. Second, most probable that the government wants to protect only its own citizens and interested in the development of national casino business. But the restriction on an individual's ability to wafer at online casinos will lead to decrease of the profit the casinos get from the foreign citizens.
So, even from these assumptions, we understand that regulations of on-line casinos are too complicated to be implemented in the nearest future. But let's see leave the technical point of view and look if it fair to restrict a personal freedom in this way.
Of course a lot of people are ready to tell that it is unfair of the government to prohibit make big stakes in on-line casinos because it deprives people of right to manage their own money. But those people should not forget that here we are talking of on-line business which creates several times more opportunities for fraud than any other type of business. It can happen that somebody will try to use a credit card of another person for gambling, or that a grandchild will spend all the retirement money of his own grandparents. Internet has a plenty of opportunities for people who want to use the identity of another person.
Also it is difficult to control access to gambling sites. We know that there is security which can prohibit from casino some types of people because of their appearance or failure to show an ID proving that people are legally capable. It can be that some people have a gambling addiction and prohibited from the casino. But without special restrictions nothing can stop those people from performing actions they may regret.
So, I think that government or even casinos itself should impose restrictions on an individual's ability to wager at online casinos. It can be a phone call to make an identity check, a system of password and codes confirming the amount. Sometimes a small typo can lead to dramatic events. What if a person typed 1000 instead of 100? What if he accidentally presses "ok" instead of "close the window"? I think that the questions as "are you sure that you want to bet a 1000 of dollars now?" will be very useful. Also I think that the government and casinos should give people as much information about online business as possible because knowledge is the best weapon against of fraud.
Thursday, March 4, 2010
The purpose of government is not to ensure the financial well-being of its citizens, but rather to maintain order.
What is the government? There are so many concepts and doctrines explaining the meaning of this word. The pivotal element of this definition are the functions of the government. The only purpose of creation of the government is to make it to fulfill the functions private sector cannot perform.
There is an opinion that the purpose of the government in not to ensure the financial well-being of its citizens, but rather to maintain order. I think that today in the conditions of global economical downfall almost nobody will agree with this statement. All the taxpayers know that the amount of taxes allows to the government to finance a plenty of social projects. And I cannot agree that maintain of order and the reduction of violence crime rate are the only activities deserving sponsorship.
I think that government should care about the financial well-bring of its citizens. Especially it should be concerned about children and retired people. I believe successful government cannot let the children strive, live in the street and do not get the access to education. Also people should be able during their working time to save enough money to provide a up-to-level standard of living for the rest of their life. In case if government takes the responsibility of accumulation and distribution of the retirement money it has to make sure that retired people can buy food, medicines and pay their rent. In this case I would like to provide an example. In Russia government takes control over retirement money, it takes the whole amount as a part of taxes and manage it. Only government can determine how much a person will get paid when he is retired. Honestly I do not think that this function of the government is performed effectively in Russia. There are a lot of striving poor retired people. And it is very difficult for me to see an old women who cannot allow candies in the shop or an old an old man who cannot buy medicines necessary for maintaining his health. And those people worked and paid taxes the whole life!
The second example I would like to provide is a fiscal policy of the government. I am a 100% sure that government should be responsible for currency rates and the level of inflation in the country. Only government has enough resources to maintain stability in which business thrives. And in 1998 during default in Russia people almost overnight lost all their savings. Is that a stimulus for farther development of the business? Do people really want to work when they do not know what happens tomorrow.
So, I never can agree with the statement that the modern government is not ensure the financial well-being if its citizens, but rather to maintain order. Maybe this statement can be useful for another types of societies, but not for a modern one. Well, maybe for native of Australia people in the year let's tell 1450 the government should maintain the order only. They did not need any centralized control and were not involved in any type of international activities. But today the world faces much more global problems which are so complicated that cannot be solved without active government interference.
There is an opinion that the purpose of the government in not to ensure the financial well-being of its citizens, but rather to maintain order. I think that today in the conditions of global economical downfall almost nobody will agree with this statement. All the taxpayers know that the amount of taxes allows to the government to finance a plenty of social projects. And I cannot agree that maintain of order and the reduction of violence crime rate are the only activities deserving sponsorship.
I think that government should care about the financial well-bring of its citizens. Especially it should be concerned about children and retired people. I believe successful government cannot let the children strive, live in the street and do not get the access to education. Also people should be able during their working time to save enough money to provide a up-to-level standard of living for the rest of their life. In case if government takes the responsibility of accumulation and distribution of the retirement money it has to make sure that retired people can buy food, medicines and pay their rent. In this case I would like to provide an example. In Russia government takes control over retirement money, it takes the whole amount as a part of taxes and manage it. Only government can determine how much a person will get paid when he is retired. Honestly I do not think that this function of the government is performed effectively in Russia. There are a lot of striving poor retired people. And it is very difficult for me to see an old women who cannot allow candies in the shop or an old an old man who cannot buy medicines necessary for maintaining his health. And those people worked and paid taxes the whole life!
The second example I would like to provide is a fiscal policy of the government. I am a 100% sure that government should be responsible for currency rates and the level of inflation in the country. Only government has enough resources to maintain stability in which business thrives. And in 1998 during default in Russia people almost overnight lost all their savings. Is that a stimulus for farther development of the business? Do people really want to work when they do not know what happens tomorrow.
So, I never can agree with the statement that the modern government is not ensure the financial well-being if its citizens, but rather to maintain order. Maybe this statement can be useful for another types of societies, but not for a modern one. Well, maybe for native of Australia people in the year let's tell 1450 the government should maintain the order only. They did not need any centralized control and were not involved in any type of international activities. But today the world faces much more global problems which are so complicated that cannot be solved without active government interference.
does the store need re-branding
ESSAY QUESTION
The following appeared in a market research report examining consumer perceptions of a chain of clothing stores:
"A recent survey commissioned by the market research department of XY Gen Stores indicated a high level of recognition among consumers of the brand and the nature of the apparel sold in XY Gen Stores. However, the survey also indicated that approximately 60% of those surveyed that recognized the name of XY Gen Stores had never shopped at one of the company's stores. Because of this result, XY Gen Stores executives should launch a significant rebranding and marketing campaign to change the company's image and thereby bring new consumers into the stores.
Discuss how well reasoned you find this argument. Point out flaws in the argument's logic and analyze the argument's underlying assumptions. In addition, evaluate how supporting evidence is used and what evidence might counter the argument's conclusion. You may also discuss what additional evidence could be used to strengthen the argument or what changes would make the argument more logically sound.
MY RESPONSE
The market research contains the argument that XY Gen Stores is recognized by the customers, but 60 % of the customers who recognize the brand have never shopped at one of the company's stores. The author of the marketing research decided that the best for XY Gen Stores would be to launch a re-branding and to change a company image. He claims that these actions will attract customers who heard about brand but have never thought to buy it.
The following appeared in a market research report examining consumer perceptions of a chain of clothing stores:
"A recent survey commissioned by the market research department of XY Gen Stores indicated a high level of recognition among consumers of the brand and the nature of the apparel sold in XY Gen Stores. However, the survey also indicated that approximately 60% of those surveyed that recognized the name of XY Gen Stores had never shopped at one of the company's stores. Because of this result, XY Gen Stores executives should launch a significant rebranding and marketing campaign to change the company's image and thereby bring new consumers into the stores.
Discuss how well reasoned you find this argument. Point out flaws in the argument's logic and analyze the argument's underlying assumptions. In addition, evaluate how supporting evidence is used and what evidence might counter the argument's conclusion. You may also discuss what additional evidence could be used to strengthen the argument or what changes would make the argument more logically sound.
MY RESPONSE
The market research contains the argument that XY Gen Stores is recognized by the customers, but 60 % of the customers who recognize the brand have never shopped at one of the company's stores. The author of the marketing research decided that the best for XY Gen Stores would be to launch a re-branding and to change a company image. He claims that these actions will attract customers who heard about brand but have never thought to buy it.
I think that there are some flaws which create ambiguity in the report. First of all, the author told that there is a high level of recognition of the brand. But he did not tell the precise data. It would be useful to know how many percent of customers recognize the brand. To prove the fact that the brand recognition is really high this indicator should be compared with the industry average or prior year data.
Also author noted that 60% of the potential customers recognize brand but have never got the idea to try it. As an owner or executive of XY Gen Stores I would like to get to know two facts related with this statement. First, what is proportion of this group of customers to other people who can be customers? Is this number material in comparison with number of people who have never heard about the brand? If yes, I would like to get to ask a second question. What is the reason that the people who already know about the brand not to shop at XY Gen store?
The marketing specialist who wrote a report proposed a quite expensive action - re-branding. But why did he decide that the company actually need it? Maybe the people who recognize the brand but do not uses it do not think that brand has a bad reputation? Maybe the store is far from their houses and they prefer to shop at the stores nearby? Before considering the idea of re-branding the author of the marketing report should name the reasons to do so. In the argument above those reasons are missing.
Also the marketing specialist did not tell anything about the influence of the re-branding on the existing customers who shop at XY gen. How will re-branding influence on them? Will it be possible that some existing customers will stop buying from XY Gen in the result of re-branding?
So, I think that the author of the marketing research did a good statistical job. But his interpretation of the data is not quite clear. It can be that he just skipped some assumptions about which I have already mentioned in my critique. But it is also possible that the agency did not collect enough verifiable data and conducted the consulting intuitively. But, anyway, as a CEO or a major shareholder of the company I will require detailed calculations supporting the inferences made by the author. And if I did not get a reasonable explanation of the course of action proposed in the report I will never hire this marketing agency again.
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