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The fact that a superior product can generate a competitive advantage for a company does not mean that every attempt at improving a product's quality will create such an advantage. Investments in product quality, like those in marketing and distribution, must be weighed against other types of investments with regard to direct, tangible benefits, such as increased profitability (including one or both of decreased costs and increased revenues) resulting from an investment. If a company is already competitive with others in the market in providing a product that is satisfactory to customers and avoids a negative reputation, then investment in increasing the quality of the product may be wasted because product quality, so long as it exceeds a minimum threshold, is rarely a primary factor for most customers in their buying decisions.

This concept was not understood by executives of one leading toy company, which failed to improve its competitive position, despite tremendous investment in strengthening the durability of its wooden toys. The toy company's executives did not recognize the leading role in which the brand names of their company and that of their primary competitors play in the buying decisions of their customers. As such, customers who are satisfied with a certain brand tend to remain loyal to that brand, despite changes in the quality of products made by that brand or any of its competitors. Similarly, they failed to analyze and properly understand the negative effects of an improvement in product quality, whereby their future purchases by customers loyal to their brand were actually cannibalized by the improved durability and extended lifespan of the newly improved toys. The only positive outcome of the improved product quality was the ability to easily market the toys to customers.


According to the passage, investments in product quality are comparable to investments in marketing and distribution in terms of their

A.ability to measure the direct results they produce
B.increased revenues they eventually produce
C.manner in which they should be analyzed
D.insufficient basis upon which executives research them
E.level of competitive advantage they provide to a company


Can we discuss about choice(A) please.

I would eliminate (a) because that answer is about the ABILITY to measure impact and the problem here is not about whether or not we can measure impact (passage is clear we absolutely can)... the problem is that beyond a certain threshold, investing in quality, just like in marketing, has no impact and we should measure the impact based on tangible results (like revenue)

I would also eliminate (d): this isn't about poor research by business leaders: again, they have the facts

I would eliminate (b): my reading of that answer is that it is implying that quality and marketing investments have a similar scale of impact on revenues... which is not what the passage argues. The passage is arguing that both should be measured in terms of "direct, tangible impact" (like revenue)

By that same logic, I would eliminate (e).

So we are left with (c): manner in which they should be analyzed. Again, I think the key sentence is this: "Investments in product quality, like those in marketing and distribution, must be weighed against other types of investments with regard to direct, tangible benefits, such as increased profitability (including one or both of decreased costs and increased revenues) resulting from an investment"

That is about determining what analysis to run to measure impact/success.

Helpful?

I looked into the same sentence that you suggested "Investments in product quality, like those in marketing and distribution, must be weighed against other types of investments with regard to direct, tangible benefits, such as increased profitability" but I earlier misunderstood 'the analysis' and 'the ability'.Thanks.That helps a lot.