In the memo to the corporate body of the beverage
manufacturer, it has been argued that the price reductions should be offered on
all drinks to increase the profitability of the company. This argument is substantially
flawed, offers inconclusive information and it draws unreasonably far-reaching
conclusions.

The evidence cited involves ambiguous language. It has been
mentioned in the memo that the promotional price reduction has resulted in
dramatic increase in unit sales, however, it doesn’t state that whether this
increase in unit sales has resulted in any increase in profits or not. The
probability of drawing more customers by price reduction is high however
equally the chances of making more profit are less. Simply by making a claim
that increase in unit sales will result in increased profitability, the author
has failed to provide a conclusive evidence about the effect on profitability
by offering price reductions.

Having presented a questionable evidence, the author draws
the conclusion that reducing the prices on all drinks produced by firm will
increase the profitability. In the manufacturing companies, cost of producing
products is not directly proportional to the sale price. To maintain market,
some companies put very little margin on their products. Offering price reduction
on those drinks will decrease the profitability instead of increasing it. Also,
no evidence has been cited in support of the sales of the other drinks. There
is a probability that one product is the main product of the company whereas
all other drinks are for niche markets only. Reducing price on those drinks
will only bring the profitability down.

The price reduction on one type of drink is already in
existence. So presumably, the increase in sales units would have brought some
kind of increase in the profitability. Evidence that the existing price reduction
has resulted in increased profitability of the company would enormously strengthen
the argument. Curiously, nothing has been mentioned about the current profitability
of the company. These numbers would enormously help to evaluate the argument
better.

The argument is neither persuasive nor compelling. The
author has failed to convey any compelling reasons for the drinks manuafacturer
to offer price reduction on all kind of drinks. 

Hey Rohit,