Sunday, May 4, 2008

GMAT AWA

The following appeared in the opinion column of a financial magazine.
“On average, middle-aged consumers devote 39 percent of their retail expenditure to department store products and services, while for younger consumers the average is only 25 percent. Since the number of middle-aged people will increase dramatically within the next decade, department stores can expect retail sales to increase significantly during that period. Furthermore, to take advantage of the trend, these stores should begin to replace some of those products intended to attract the younger consumer with products intended to attract the middle-aged consumer.”
Discuss how well reasoned... etc.
The author is recommending store to focus more on attracting middle aged consumer over younger consumer for 2 reasons: 1) middle aged consumer spend 39 percent of their retail expenditure at departmental store whereas for young consumer it is only 25 percent. 2) The number of middle aged people will increase dramatically within next 10 years. The argument is unconvincing because it has not taken following points into consideration.
Firstly, the author is ignoring the younger consumer. These stores should do the analysis on younger population also. For example, they should see the reason behind younger population spending only 25 percent of the retail expenditure at departmental store, probably, then come out with some strategy to attract younger population, rather than focussing only on the middle-aged population. Furthermore, information should be there on how much increase will be in population of younger consumer in coming decade, because they will also have some market share in future.
Secondly, author is relying only on the percentage of the retail expenditure spend at departmental store, without looking at the total consumer base. Information should be there on the total number of younger consumer and middle aged consumer. It is possible that 25 percent of young consumer is much more than 39 percent of middle aged population.
As it stands, argument is weak. So, before drawing any conclusion, author should study the data related to younger consumer, and hence lookout for the ways to attract them also. Also, author should have more information related to total consumer base of various age group. Only then the argument could be strengthened.

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