Q3 to Q6:
Extensive research has shown
that the effects of short-term price
promotions on sales are themselves
Line
short-term.
Companies’ hopes that
(5)
promotions might have a positive
aftereffect have not been borne
out for reasons that researchers
have been able to identify.
A price
promotion entices only a brand’s
(10)
long-term or “loyal” customers;
people seldom buy an unfamiliar
brand merely because the price is
reduced.
They simply avoid paying
more than they have to when one of
(15)
their customary brands is temporar-
ily available at a reduced price.
A
price promotion does not increase
the number of long-term customers
of a brand, as it attracts virtually
(20)
no new customers in the first place.
Nor do price promotions have linger-
ing aftereffects for a brand, even
negative ones such as damage to
a brand’s reputation or erosion of
(25)
customer loyalty, as is often feared.
So why do companies spend so
much on price promotions?
Clearly
price promotions are generally run
at a loss, otherwise there would
(30)
be more of them.
And the bigger
the increase in sales at promotion
prices, the bigger the loss.
While
short-term price promotions can
have legitimate uses, such as
(35)
reducing excess inventory, it is the
recognizable increase in sales that
is their main attraction to manage-
ment, which is therefore reluctant
to abandon this strategy despite
its effect on the bottom line.
--------------------------------------------------------------------------------
Q3:
The primary purpose of the passage is to
A compare the arguments in favor of a certain strategy with those against it
B attack a certain strategy by enumerating its negative consequences
C justify the use of a certain strategy in light of certain criticisms that have been made against it
D advocate a particular strategy by arguing against an alternative
E explain the effects of a certain strategy and the primary motivations for adopting it
Answer:
--------------------------------------------------------------------------------
Q4:
According to the passage, which of the following is the reason why short-term price promotions do not attract new long-term customers to a brand?
A Short-term price promotions do not produce an increase in sales.
B Customers come to regard the promotional price as the fair price and the regular price as excessive.
C Most customers select among competing products largely on the basis of price and very few are loyal to any particular brand.
D Customers who have not previously bought the promoted brand are almost never persuaded to do so by the short-term price promotions.
E Any customers that a brand gains by means of a short-term price promotion are liable to be lost when a competing brand has a similar promotion.
Answer:
--------------------------------------------------------------------------------
Q5:
The passage suggests that evidence for price promotions’ “effect on the bottom line” (line 40) is provided by
A the lack of lingering aftereffects from price promotions
