The following appeared in a memo to the board of directors 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 in selling cereal, we recommend that Bargain
Brand now expand its business and begin marketing other low-priced food products as
quickly as possible."
Write a response in which you examine the stated and/or unstated assumptions of the
argument. Be sure to explain how the argument depends on these assumptions and what
the implications are for the argument if the assumptions prove unwarranted.
There are many unstated assumptions in the argument regarding Bargain Brand
Cereals. It is said that a year ago Bargain Brand Cereals introduced a low priced
cereal that succeded in the market. And it is assumed that releasing another
product now will also prove to be successful. There are many assumptions, which if
proved to false will lead to the downfall of the company.
Firstly, it is assumed the success of the cereal is attributed to its low price.
Maybe the customers were fond of the cereal due to its taste rather than the price
itself. It might have been that along with lower cost, there were many other
factors, which lead to the rise in sales of that product. Making this assumption as
the base for other products, Bargain Brand Cereals plans on releasing other low
priced products with high hopes of success. The people might not like the flavour
of the new cereal. Even then if the product is released the sales of Bargain Brand
Cereals could plummet and lead to the downfall of the company. Alternatively, the
argument could specify extra reasons pertaining to the success of that particular
cereal.
It is specified that even though the top-notch companies could not compete with
Bargain Brand Cereals. Even after, lowering their prices and implementing new
plans, they could not beat Bargain Brand Cereals in terms of sales. Herein, it is
assumed that the market at present is the same as that of a year ago. The top-
selling companies could have been facing a crisis due to various factors. Due to
which they could not perform well in the market. And it could be that they have
recovered from their fallback and now are ready to surpass Bargain Brand Cereals.
This could prove fatal to Bargain Brand Cereals, as theirs is a start-up with
minimal experience.
Lastly, Bargain Brand Cereals plans on introducing other food products into the
market where it has no experience. It is assumed that since their cereal business
of one product was successful their entire production of other products is likely
to be successful. Without any background knowledge of the statistics of food
products they are going to release, solely based on the success of one product
Bargain Brand Cereals is ready to release other products. This assumption if
unchecked will incur losses to the company.
To elucidate, if the above assumptions are not examined, they are proved to be
dangerous for the company and may have serious implications.
