A market analysis investigated what drives consumer loyalty to coffee shop chains. The prevailing industry belief was that price point...
GMAT Information and Ideas : (Ideas) Questions
A market analysis investigated what drives consumer loyalty to coffee shop chains. The prevailing industry belief was that price point served as the dominant factor in customer retention. Coffee shops with lower average prices were predicted to have substantially higher customer return rates than premium-priced competitors. Research data was collected from five local establishments, but an analyst seeks to challenge the assumption that pricing strategy provides the complete explanation for loyalty patterns.
| Coffee Shop | Customer Return Rate | Price Category | Offers Loyalty Rewards |
|---|---|---|---|
| Brew Brothers | 45% | Budget | No |
| Daily Grind | 72% | Premium | Yes |
| Corner Café | 38% | Budget | No |
| Morning Rush | 59% | Premium | No |
| Bean Counter | 51% | Budget | Yes |
Which choice best describes data from the table that support the analyst's challenge to price-focused explanations?
Daily Grind achieved higher customer loyalty than any budget-priced establishment, contradicting the prediction that lower prices drive higher return rates.
Morning Rush had lower customer loyalty than Daily Grind, even though both charge premium prices.
Among budget-priced establishments, Bean Counter showed higher retention than both Brew Brothers and Corner Café.
The overall range of return rates varied by 34 percentage points across all establishments.
Step 1: Decode and Map the Passage
Create Passage Analysis Table
| Text from Passage | Analysis |
|---|---|
| "A market analysis investigated what drives consumer loyalty to coffee shop chains." |
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| "The prevailing industry belief was that price point served as the dominant factor in customer retention." |
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| "Coffee shops with lower average prices were predicted to have substantially higher customer return rates than premium-priced competitors." |
|
| "Research data was collected from five local establishments, but an analyst seeks to challenge the assumption that pricing strategy provides the complete explanation for loyalty patterns." |
|
Data Table: Shows 5 coffee shops with return rates (38%-72%), price categories (Budget/Premium), and loyalty rewards (Yes/No)
Provide Passage Architecture and Core Elements
Main Point: A market analysis collected data to test whether price is truly the main driver of coffee shop customer loyalty, with an analyst seeking to challenge this price-focused assumption.
Argument Flow: The passage establishes the industry's price-centric view of loyalty, explains the specific prediction this creates (budget shops should have higher return rates), then introduces research data and an analyst's goal to challenge whether price alone explains loyalty patterns.
Step 2: Interpret the Question Precisely
What's being asked? Which data from the table supports the analyst's challenge to price-focused explanations
What type of answer do we need? Specific data evidence that contradicts or undermines the prediction that lower prices drive higher return rates
Any limiting keywords? "support the analyst's challenge" - we need data that goes against the price theory, not data that supports it
Step 3: Prethink the Answer
- The industry predicted that budget shops should have substantially higher return rates than premium shops
- The right answer should show us data where this prediction fails - either where premium shops actually outperform budget shops, or where factors other than price seem to matter more for loyalty
- Looking at our table data, we can see that Daily Grind (premium, 72%) has the highest return rate of all shops, beating every budget option
- This directly contradicts the price-prediction
- The right answer should point to data showing premium shops outperforming budget shops in customer loyalty
Daily Grind achieved higher customer loyalty than any budget-priced establishment, contradicting the prediction that lower prices drive higher return rates.
- Daily Grind (premium, 72% return rate) did achieve higher loyalty than any budget shop (Bean Counter highest at 51%)
- This directly contradicts the industry prediction that lower prices drive higher return rates
- Perfect support for the analyst's challenge to price-focused explanations
Morning Rush had lower customer loyalty than Daily Grind, even though both charge premium prices.
- Compares two premium shops to each other (Daily Grind vs Morning Rush)
- Doesn't challenge the price theory since both shops are in the same price category
- Shows variation within premium category, but doesn't contradict the budget vs premium prediction
Among budget-priced establishments, Bean Counter showed higher retention than both Brew Brothers and Corner Café.
- Compares budget shops among themselves (Bean Counter vs others)
- Actually supports the idea that other factors matter within price categories, but doesn't directly challenge the prediction about budget vs premium performance
The overall range of return rates varied by 34 percentage points across all establishments.
- Simply states the mathematical range of return rates (\(72\% - 38\% = 34\%\))
- Provides no information about price relationships or whether the prediction held true