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Price promotions, such as temporary price reductions or coupon offers, have a large, measurable, immediate effect on a brand's sales. However, such promotions increase price sensitivity, which constrains profitability because it becomes more difficult to raise prices. Furthermore, price promotions become increasingly less effective, making it necessary to offer more costly promotions in the future. Finally, price promotions encourage consumer stockpiling (buying more, less often), which leads to greater volatility in sales, exacerbating the task of managing inventories, thereby increasing costs and further reducing profitability. Therefore, retail managers should ___________
Which of the following most logically completes the argument above?
| Text from Passage | Analysis |
| Price promotions, such as temporary price reductions or coupon offers, have a large, measurable, immediate effect on a brand's sales. |
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| However, such promotions increase price sensitivity, which constrains profitability because it becomes more difficult to raise prices. |
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| Furthermore, price promotions become increasingly less effective, making it necessary to offer more costly promotions in the future. |
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| Finally, price promotions encourage consumer stockpiling (buying more, less often), which leads to greater volatility in sales, exacerbating the task of managing inventories, thereby increasing costs and further reducing profitability. |
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| Therefore, retail managers should ___________ |
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The argument follows a classic problem-solution structure. It starts by acknowledging the obvious benefit of price promotions (immediate sales boost), then systematically presents three major problems: increased price sensitivity hurting long-term pricing power, diminishing returns requiring costlier future promotions, and stockpiling creating inventory management nightmares. Each problem builds on the previous one to show how short-term gains lead to long-term pain.
Retail managers should avoid or minimize price promotions (the blank will likely be filled with advice to avoid price promotions or use alternative strategies).
This is a 'weighing costs vs benefits' argument where the author shows that while promotions have immediate benefits, the three long-term costs (price sensitivity, diminishing effectiveness, and inventory volatility) outweigh those benefits. The logic flows: Benefit acknowledged → Cost 1 → Cost 2 → Cost 3 → Therefore, avoid the practice that causes these costs.
Logically Completes - We need to find a conclusion that follows naturally from the evidence presented about the problems with price promotions
The argument presents specific negative effects: increased price sensitivity constraining profitability, diminishing effectiveness requiring costlier promotions, and stockpiling creating inventory management costs
Since the argument systematically builds a case against price promotions by listing three major downsides (price sensitivity, diminishing returns, inventory problems), we need a conclusion that logically follows from these problems. The completion should recommend action that addresses or responds to these identified issues with promotions.