swlfxer

Claim: the manufactures could often make more profit by not holding the promotions.

During such a promotion RETAILERs (not manufacture) tend to accumulate in their warehouses inventory bought at discount, they then sell much of it later at their regular price.  If so, a retailer can accumulate all the products it wants during the promotion and need not buy any product at regular prize from the manufacture.  Thus, the profit for the manufacture is lower than the profit could have been without the promotion.

This answer choice supports the conclusion of the argument.

swlfxer

The focus is not during the promotion, but after the promotion. Because the retailer accumulated more products than it could sell during the promotion, then after the promotion it would order FEWER products from the manufacture for future demands from the customers.  Without the promotion, the retailer HAS to order these regular-priced products from the manufacture for customers.