A manufacturer of workstations for computer-aided design seeks to increase sales to its most important corporate customers. Its strategy is...
GMAT Critical Reasoning : (CR) Questions
A manufacturer of workstations for computer-aided design seeks to increase sales to its most important corporate customers. Its strategy is to publish very low list prices for workstations in order to generate interest among the buyers for those corporations.
Which of the following, if characteristic of the marketplace, would tend to cause the manufacture's strategy to fail?
Passage Analysis:
| Text from Passage | Analysis |
| A manufacturer of workstations for computer-aided design seeks to increase sales to its most important corporate customers. |
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| Its strategy is to publish very low list prices for workstations in order to generate interest among the buyers for those corporations. |
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Argument Flow:
The passage presents a simple two-part setup: first it tells us what a company wants to achieve (more sales to corporate customers), then it explains their chosen method (advertising very low prices to generate interest). There's no conclusion here - just the foundation for evaluating this strategy.
Main Conclusion:
There is no conclusion in this passage. It's purely descriptive, explaining a company's goal and their strategy to achieve it. The passage sets up a scenario for us to analyze.
Logical Structure:
This isn't a complete argument with premises and conclusion. Instead, it's a scenario description that establishes: Goal (increase corporate sales) → Method (publish low list prices) → Expected result (generate buyer interest). We're meant to evaluate whether this strategy would work or fail under different marketplace conditions.
Prethinking:
Question type:
Weaken - We need to find marketplace characteristics that would make the manufacturer's low pricing strategy fail to increase sales to corporate customers
Precision of Claims
The strategy is specifically about publishing very low list prices to generate interest among corporate buyers, with the goal of increasing sales to the most important corporate customers
Strategy
Look for marketplace characteristics that would prevent low list prices from translating into actual increased sales. We need to think about what could go wrong between publishing low prices and achieving the goal of more sales to corporate customers. Focus on corporate buying behavior, market dynamics, or pricing mechanisms that could make this strategy backfire or be ineffective
This would actually support the strategy's success, not cause it to fail. If corporate buyers perceive the list prices as genuinely low, this validates that the manufacturer's strategy of publishing low prices to generate interest is working as intended. When buyers think prices are low, they're more likely to be interested in purchasing, which aligns perfectly with the manufacturer's goal.
This describes product commoditization but doesn't explain why low pricing would fail as a strategy. In fact, when products are similar across manufacturers, price becomes even more important as a differentiating factor. If anything, this marketplace characteristic would make the low pricing strategy more effective, not less effective.
Having knowledgeable buyers doesn't inherently make a low pricing strategy fail. Knowledgeable buyers can still appreciate genuinely good prices and may even be more likely to recognize when prices are truly competitive. Knowledge about market pricing would help buyers evaluate whether the manufacturer's low list prices represent real value.
Different resource allocation capabilities among customers doesn't create a systematic problem with the low pricing strategy. Some customers having more or less budget doesn't prevent the strategy from working - if anything, low prices might attract customers with limited resources who couldn't afford higher-priced alternatives.
This creates a fundamental conflict with the manufacturer's strategy. If buyers receive bonuses for negotiating large discounts from list prices, then publishing very low list prices becomes counterproductive. Buyers would need to negotiate substantial savings to earn their bonuses, but if the list price is already very low, there's little room for meaningful discounts. This could make buyers less interested in deals that don't offer significant negotiation opportunities, directly undermining the strategy's effectiveness.