Companies that sell soap, perfume, candy bars, and other consumer products are expert at "decommoditizing" them: finding and capturing the...
GMAT Reading Comprehension : (RC) Questions
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Companies that sell soap, perfume, candy bars, and other consumer products are expert at "decommoditizing" them: finding and capturing the value of intangible benefits and building strong brand identification. But companies that sell unspecialized products such as bulk chemicals, paper, and steel to businesses tend to be unsophisticated in these matters. Many of these companies strive to churn out more product more cheaply and then to sell as much as possible at the market price. Viewing themselves as commodity producers, they are likely to overlook the nonfunctional features of their products—delivery speeds, after-sales service, etc.
As a result, such companies leave large amounts of money on the table. They would be far better off if they looked to marketing-oriented businesses and embraced the notion that buyers care not only about a product's price but also about the way it is sold to them, the services that accompany it, and their relationship with the seller. If these manufacturers were to take that approach, they would find themselves thinking about their customer base not as they have traditionally segmented it—large and small, based in France or Germany, and so forth—but as composed of businesses that want (and are willing to pay for) quite different things. This would in turn help manufacturers focus on the segments whose business they can win and retain most profitably.
Ques. 1/3
Which of the following most nearly approximates the meaning of the phrase "nonfunctional features" (see highlighted text) in the passage?
Solution
1. Passage Analysis:
Progressive Passage Analysis
| Text from Passage | Analysis |
|---|---|
| Companies that sell soap, perfume, candy bars, and other consumer products are expert at "decommoditizing" them: finding and capturing the value of intangible benefits and building strong brand identification. | What it says: Some companies are really good at making their products seem special and unique, even when they're basic items everyone uses. What it does: Introduces the concept of "decommoditizing" with concrete examples Source/Type: Author's factual observation Connection to Previous Sentences: This is our opening - establishes the first part of what will likely be a comparison Visualization: Consumer Product Companies: • Soap Company A: Takes basic soap → Creates "luxury moisturizing experience" → Charges $8 instead of $2 • Perfume Company B: Takes scented liquid → Creates "signature identity" → Charges $80 instead of $15 • Candy Company C: Takes sugar/chocolate → Creates "premium indulgence" → Charges $5 instead of $1 What We Know So Far: Some companies excel at making basic products seem special What We Don't Know Yet: Why this matters, what other companies do differently Reading Strategy Insight: The author gives us familiar examples (soap, perfume, candy) to make the concept accessible |
| But companies that sell unspecialized products such as bulk chemicals, paper, and steel to businesses tend to be unsophisticated in these matters. | What it says: Other companies that sell basic business supplies are not good at making their products seem special. What it does: Introduces the contrast - the "other side" of companies Source/Type: Author's factual observation Connection to Previous Sentences: • Sentence 1 told us: Consumer companies ARE good at decommoditizing • NOW Sentence 2: Business-to-business companies are NOT good at it • This is setting up a classic contrast structure Visualization: GOOD at Decommoditizing: Consumer companies (soap, perfume, candy) vs. BAD at Decommoditizing: B2B companies (chemicals, paper, steel) What We Know So Far: There are two types of companies with opposite approaches to making products special What We Don't Know Yet: What exactly the bad companies do wrong, what the consequences are Reading Strategy Insight: Feel confident here - the author is giving us a simple A vs. B structure |
| Many of these companies strive to churn out more product more cheaply and then to sell as much as possible at the market price. | What it says: These business supply companies just try to make lots of stuff cheaply and sell it at whatever price the market sets. What it does: Elaborates on what "unsophisticated" means - gives us the specific behavior Source/Type: Author's observation about business behavior Connection to Previous Sentences: • Sentence 2 told us: B2B companies are "unsophisticated in these matters" • NOW Sentence 3: Explains exactly what "unsophisticated" looks like • This builds on sentence 2 by getting specific Visualization: Unsophisticated B2B Company Strategy: Step 1: Make 1000 tons of steel as cheaply as possible Step 2: Sell all 1000 tons at market price ($500 per ton) Step 3: Repeat with focus only on volume and cost Result: $500,000 revenue, competing only on price Reading Strategy Insight: This is NOT new complexity - it's the author helping us understand the previous sentence better |
| Viewing themselves as commodity producers, they are likely to overlook the nonfunctional features of their products—delivery speeds, after-sales service, etc. | What it says: Because these companies see themselves as just making basic stuff, they ignore all the extra things that could make them special (like fast delivery or good customer service). What it does: Continues elaborating on the B2B companies' problems - explains WHY they act unsophisticated Source/Type: Author's analysis of business mindset and consequences Connection to Previous Sentences: • Sentence 3 told us: What they DO (focus on volume/price) • NOW Sentence 4: WHY they do it (wrong self-perception) and what they miss • This continues building the picture of "unsophisticated" behavior Visualization: B2B Company's Missed Opportunities: • Standard delivery: 2 weeks → Could offer 3-day delivery for +$50/ton • No service: Drop off product → Could offer installation help for +$100/ton • No relationship: One-time sale → Could offer ongoing consulting for +$200/ton But they miss all this because they think: "We just make steel" Reading Strategy Insight: The author is still explaining the same concept (B2B companies' problems) - we're going deeper, not learning something new |
| As a result, such companies leave large amounts of money on the table. | What it says: Because of all these mistakes, these companies miss out on making a lot more money. What it does: States the consequence/cost of the unsophisticated approach Source/Type: Author's conclusion about the business impact Connection to Previous Sentences: • Sentences 2-4 told us: All the things B2B companies do wrong • NOW Sentence 5: The simple bottom line - they lose money • This gives us the "so what" - why we should care about this problem Visualization: Company's Current Reality: • 1000 tons steel × $500 = $500,000 Money Left on Table: • Fast delivery premium: $50,000 • Service premium: $100,000 • Relationship premium: $200,000 • Total missed: $350,000 (70% more revenue!) What We Know So Far: Consumer companies excel at decommoditizing; B2B companies don't and lose significant money as a result What We Don't Know Yet: What the solution is Reading Strategy Insight: This sentence makes the stakes clear - now we know why this matters |
| They would be far better off if they looked to marketing-oriented businesses and embraced the notion that buyers care not only about a product's price but also about the way it is sold to them, the services that accompany it, and their relationship with the seller. | What it says: These companies should copy what the consumer companies do and realize that customers care about more than just price - they care about the buying experience, extra services, and relationships. What it does: Presents the solution to the problem established in sentences 2-5 Source/Type: Author's recommendation/prescription Connection to Previous Sentences: • Sentences 2-5 told us: The problem (B2B companies miss opportunities and money) • NOW Sentence 6: The solution - copy the successful consumer companies from sentence 1 • This brings us full circle back to the opening concept Visualization: Current B2B Thinking: "Customer only cares about $500/ton price" ↓ Better B2B Thinking (like consumer companies): "Customer cares about: • Price: $500/ton • HOW we sell: Easy ordering process • Services: Fast delivery, installation help • Relationship: Trust, reliability, consultation" Reading Strategy Insight: Feel relieved here - this isn't new complexity! The author is giving us the straightforward solution by connecting back to sentence 1 |
| If these manufacturers were to take that approach, they would find themselves thinking about their customer base not as they have traditionally segmented it—large and small, based in France or Germany, and so forth—but as composed of businesses that want (and are willing to pay for) quite different things. | What it says: If these companies followed this advice, they would stop grouping customers by simple categories (big/small, location) and start grouping them by what they actually value and will pay extra for. What it does: Elaborates on how the solution would work in practice - describes the mindset shift Source/Type: Author's projection of how the recommended change would play out Connection to Previous Sentences: • Sentence 6 told us: The solution (copy consumer companies' approach) • NOW Sentence 7: What that solution looks like in practice • This continues explaining the same solution, just with more detail Visualization: Old Way of Grouping Customers: • Large companies (500+ employees) • Small companies (<500 employees) • French companies • German companies ↓ New Way of Grouping Customers: • Speed-focused companies (will pay extra for fast delivery) • Service-focused companies (will pay extra for installation/support) • Relationship-focused companies (will pay extra for consultation) • Price-only companies (basic service is fine) Reading Strategy Insight: This is still the same solution from sentence 6 - the author is just helping us visualize how it would work |
| This would in turn help manufacturers focus on the segments whose business they can win and retain most profitably. | What it says: This new way of thinking about customers would help companies focus on the customer groups where they can make the most money and keep those customers happy long-term. What it does: States the final benefit/outcome of implementing the solution Source/Type: Author's conclusion about the ultimate business benefit Connection to Previous Sentences: • Sentence 6 told us: The solution • Sentence 7 told us: How it would work (new customer segmentation) • NOW Sentence 8: The final payoff - better profits and customer retention • This completes the solution by showing the end result Visualization: Company focuses on segments that value what they do best: • If good at fast delivery → Target speed-focused customers • If good at technical service → Target service-focused customers • Result: Higher profit margins + loyal customers who won't switch What We Know Now: Complete argument cycle - Problem (B2B companies miss opportunities) → Solution (copy consumer company approach) → Implementation (new segmentation) → Benefit (better profits) Reading Strategy Insight: This completes a very straightforward argument structure. The passage has been building one clear recommendation throughout - no surprises or complications! |
2. Passage Summary:
Author's Purpose:
To show why business-to-business companies are missing out on profits and to recommend how they can fix this problem by copying successful consumer companies.
Summary of Passage Structure:
The author builds their argument by contrasting two different business approaches and then offering a clear solution:
- First, the author shows us companies that are really good at making basic products seem special and valuable (like soap and candy companies).
- Next, the author contrasts this with business supply companies that are bad at this - they just focus on making things cheap and selling at market price.
- Then, the author explains what these companies are missing (things like fast delivery and good service) and shows that this costs them a lot of money.
- Finally, the author gives the solution - these companies should copy the successful consumer companies by caring about customer experience and grouping customers by what they value, which will help them make more profit.
Main Point:
Business-to-business companies that sell basic products like steel and chemicals are leaving lots of money on the table because they only focus on price and volume, but they could make much more profit if they learned from consumer companies and started paying attention to things like delivery, service, and customer relationships.
3. Question Analysis:
This question asks us to determine what the phrase "nonfunctional features" means in the context of the passage. We need to look at how this phrase is used and what specific examples the author provides to understand its meaning.
Connecting to Our Passage Analysis:
From our passage analysis, we know that:
- The passage contrasts consumer companies (good at decommoditizing) with B2B companies (bad at decommoditizing)
- The phrase "nonfunctional features" appears when the author explains what B2B companies overlook
- The author specifically states: "they are likely to overlook the nonfunctional features of their products—delivery speeds, after-sales service, etc."
- These features are contrasted with the core product itself (steel, chemicals, paper)
- The context shows these are valuable features that customers will pay for, but they're not part of the basic commodity
Prethinking:
The author uses "nonfunctional features" to describe aspects like delivery speeds and after-sales service. These aren't part of the core product function (steel is still steel regardless of how fast it's delivered), but they add value beyond the basic commodity. The key insight from our passage analysis is that these companies "view themselves as commodity producers" and therefore miss these additional value-adding aspects that aren't inherent to the commodity itself. The correct answer should capture this idea that nonfunctional features are valuable aspects that go beyond the basic commodity's inherent properties.
Answer Choices Explained
A
Aspects of the product sold that are not inherent in the type of commodity in question
Why It's Right:
- Directly matches the passage's distinction between the core commodity (steel, chemicals) and additional valuable aspects (delivery, service)
- The examples given (delivery speeds, after-sales service) are clearly not inherent properties of steel or chemicals themselves
- Aligns with the passage's main point that B2B companies miss value-adding opportunities beyond their basic commodity
- Fits the context where companies "view themselves as commodity producers" and overlook these additional aspects
Key Evidence: "Viewing themselves as commodity producers, they are likely to overlook the nonfunctional features of their products—delivery speeds, after-sales service, etc."
B
Characteristics that matter little if at all to most buyers of the product
Why It's Wrong:
- The passage clearly indicates these features DO matter to buyers - companies can charge premiums for them
- The author's whole argument is that buyers "care not only about a product's price but also about the way it is sold to them, the services that accompany it"
- The passage states companies "leave large amounts of money on the table" by ignoring these features, proving buyers value them
Common Student Mistakes:
- Thinking "nonfunctional" means "unimportant"?
→ Remember the author argues these features are valuable and profitable - "nonfunctional" refers to the product's core function, not importance to buyers - Confusing what companies think vs. what customers actually want?
→ The passage shows companies wrongly assume buyers don't care, but buyers actually do value these features
C
Product upgrades that the buyer may choose to purchase at an additional charge
Why It's Wrong:
- The examples given (delivery speeds, after-sales service) are typically included services, not optional upgrades
- Nothing in the passage suggests these are add-on purchases at extra charge
- The author discusses these as standard aspects of how products are sold, not optional extras
Common Student Mistakes:
- Thinking of these like optional car features or extended warranties?
→ The passage treats these as integral parts of the overall product offering, not separate purchasable add-ons
D
Components of the product that are not considered by manufacturers to be important
Why It's Wrong:
- This focuses on what manufacturers think rather than what "nonfunctional features" actually means
- The definition should describe the features themselves, not manufacturers' attitudes toward them
- While manufacturers do overlook these features, that's the problem being described, not the definition of the term
Common Student Mistakes:
- Confusing the problem (manufacturers ignore these) with the definition of the term?
→ Focus on what the features ARE, not on how manufacturers treat them
E
Any of the characteristics of a product that are highlighted in advertising for the product
Why It's Wrong:
- The passage is about B2B companies that are bad at marketing and don't effectively advertise these features
- The author's point is that these companies overlook marketing opportunities, not that they highlight features in advertising
- Nothing in the passage connects "nonfunctional features" to advertising practices
Common Student Mistakes:
- Connecting this to the consumer companies' marketing success?
→ The consumer companies are good at marketing, but the B2B companies discussed here are specifically bad at marketing these features
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