In competitive markets, the overwhelming tendency among small businesses involves avoiding premium pricing approaches. Cost efficiency becomes their p...
GMAT Craft and Structure : (Structure) Questions
In competitive markets, the overwhelming tendency among small businesses involves avoiding premium pricing approaches. Cost efficiency becomes their primary competitive weapon instead. When numerous low-priced alternatives exist, higher prices typically drive customers away—a market reality that shapes strategic decisions across industries. This cost-focused methodology has emerged as the standard practice for smaller firms, confirmed through extensive research. Boutique software companies, however, break from this established pattern. Their success with premium pricing stems from creating highly specialized products that generate customer dependency, effectively reducing price sensitivity while enabling superior profit margins.
Which choice best describes the overall structure of the text?
It contrasts two business strategies, explains why one strategy is more common, and then questions whether the less common strategy can be successful.
It introduces competing economic theories, presents evidence supporting one theory, and then describes research that contradicts that evidence.
It identifies a common business practice, provides the economic reasoning behind this practice, characterizes the practice as widespread, and then presents and explains an exception to this pattern.
It describes a market phenomenon, suggests that the phenomenon results from competitive pressure, and then proposes that some companies ignore this pressure due to overconfidence.
Step 1: Decode and Map the Passage
Create Passage Analysis Table
| Text from Passage | Analysis |
|---|---|
| "In competitive markets, the overwhelming tendency among small businesses involves avoiding premium pricing approaches." |
|
| "Cost efficiency becomes their primary competitive weapon instead." |
|
| "When numerous low-priced alternatives exist, higher prices typically drive customers away—a market reality that shapes strategic decisions across industries." |
|
| "This cost-focused methodology has emerged as the standard practice for smaller firms, confirmed through extensive research." |
|
| "Boutique software companies, however, break from this established pattern." |
|
| "Their success with premium pricing stems from creating highly specialized products that generate customer dependency, effectively reducing price sensitivity while enabling superior profit margins." |
|
Provide Passage Architecture & Core Elements
Main Point: While most small businesses avoid premium pricing due to competitive pressure, boutique software companies successfully use premium pricing through specialization.
Argument Flow: The passage establishes a general pattern, explains the economic logic, confirms this as standard practice, then introduces an exception and explains why this exception succeeds.
Step 2: Interpret the Question Precisely
What's being asked? The overall structure of the entire text - how the ideas are organized and flow together.
What type of answer do we need? A description that captures the logical progression and organization of the passage's components.
Any limiting keywords? None specified.
Step 3: Prethink the Answer
- The correct answer should capture that the passage starts by identifying a common business practice, provides reasoning behind this practice, confirms it as widespread, and finally presents an exception while explaining why that exception works.
It contrasts two business strategies, explains why one strategy is more common, and then questions whether the less common strategy can be successful.
✗ Incorrect
- Says the text questions whether the less common strategy can be successful
- The passage actually explains WHY boutique software companies ARE successful - it does not question their success
It introduces competing economic theories, presents evidence supporting one theory, and then describes research that contradicts that evidence.
✗ Incorrect
- Describes competing economic theories and contradicting evidence
- The passage presents one consistent economic logic throughout and does not pit different theories against each other
It identifies a common business practice, provides the economic reasoning behind this practice, characterizes the practice as widespread, and then presents and explains an exception to this pattern.
✓ Correct
- Perfectly matches our analysis - identifies common practice, provides reasoning, characterizes as widespread, presents exception, explains exception
- Each component corresponds exactly to our passage analysis
It describes a market phenomenon, suggests that the phenomenon results from competitive pressure, and then proposes that some companies ignore this pressure due to overconfidence.
✗ Incorrect
- Says companies ignore pressure due to overconfidence
- The passage explains that boutique software companies succeed through strategic specialization, not overconfidence