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. A

The memo posits that since the company has achieved seemingly a large quantity of profits in Bargain Brand breakfast cereal, they can apply the same low-priced mode to other food products as well. Nevertheless, the claim omits several indisputable questions to be answered, which are conductive for the directors to fully evaluate this suggestion.

The first question that comes into our view is whether the low-priced breakfast cereal gains adequate profits. According to the memo, it implies that the company is free of the worry about the price competition among those top-selling cereal companies, from which this company attract a crowd of customers. From this line of reasoning, we can infer that the memo is based on the assumption that the company are assured of satisfying profits, even a higher price is not necessary. However, is it really the case? If we look into the issue by our common sense, we may deduce that after several companies are competitive to make the price as low as possible, then it will be much more compelling to the customers. Under such circumstance, perhaps, the possibility for people to purchase a certain brand of cereal is equal or approximate for all the company. While it creates an illusion for this company that it has achieved a great sale, we are still unconvinced of its anticipated profits. Without the answer to the question, we cannot have a closer examination of the memo.

Furthermore, granted that the Bargain Brand breakfast cereal is a good example of low-priced food that can bring about a great deal of profits, the memo still have to answer the question whether this business mode can run well when it is applied to other low-priced food. In this case, the company is faced with unknown market of other foods, which means things may be different when it comes to other kinds of foods for which a low price may be unprepossessing to customers. What's more, the company is required to conduct survey on the taste of the customers as well as the sale strategy of its main competitors in order to figure out a reasonable plan to expand its business. Hence, if the memo can provide information to addresses the question on the availability to duplicate the low-price mode, the directors can have a global version on the future of the company.

Last but not least, there is another question goes like that, does the company really appeal to a plenty of customers? Merely from the memo, no information is offered to illustrate that the brand of food produced by this company owns a stable amount of customers. Without such information, it may happen that people are just crazy about the economic price of the Bargain Brand breakfast cereal whereas not consider it as a good reputation brand. Thus, when it comes to other food of the company, the customers may hesitate to the quality of the food. As is can be seen, the suggestion in the memo can't stand on its own without response to this question.

To sum up, we cannot safely reach the conclusion of the memo unless it can wrestle with the questions mentioned above.