TOPIC: ARGUMENT171 - The following appeared in a memo from the marketing director of Bargain Brand Cereals.
"One year ago we introduced our first product, 'Bargain Brand' breakfast cereal. Our very low prices quickly drew many customers away from the top-selling cereal companies. Although the companies producing the top brands have since tried to compete with us by lowering their prices, and although several plan to introduce their own budget brands, not once have we needed to raise our prices to continue making a profit. Given our success selling cereal, Bargain Brand should now expand its business and begin marketing other low-priced food products as quickly as possible."
At the first glance, the argument above that the low-priced food product could attract more customers and should carry out a new low-priced food product, was seems reasonable and logical, but after a deeper consideration it may be discovered that the conclusion getting from that observation is ridiculous.
First of all, even though the low price of 'Bargain Brand' breakfast cereal drew many customers away from other companies, more customers doesn’t mean to more profits which is the most important index to a company. The reason that the company sold Bargain Brand breakfast cereal at low price when they introduced their first product, is probably to attract more people to taste their delicious food, then people will buy more product and relied on this food. So maybe they need to slightly increase their price in order to get more profits. Using the lower price to attract more customers is not the aim of a merchant.
Another point is that other companies reduced their prices of food, which cannot be determined whether it is similar type of food to 'Bargain Brand' breakfast cereal. If the price-reduced food is totally different from theirs, it will have little influence to their product. Similarly, the author didn’t point out the type of food that other companies plan to introduce their own budget brands. Additionally, no evidence can illustrates that the own brand is able to attract more customers or make more profits.
At last, the author’s suggestion to launch other low-priced food products is arbitrary, because different type of food faces to different customers. Not all kind of food relies on lower price to reach more selling. The price is not the only factor influenced people’s choice of products. as far as to food, some other factors such as the taste and package would more likely influence customers’ choice.
To sum up, judging from the discussion above, it is better and wiser for the director of Bargain Brand Cereals to consider all other possible alternatives before a conclusion is reached. After all, a worse decision will make them out of market.