However,
careful scrutiny of this evidence reveals that it lends no credible support to the claim.
One problem with the brochure’s claim involves its reliance on the bare fact that revenue
from last year’s sales of health books and magazines totaled $50 million. This statistic in itself
proves nothing. Health magazines do not all focus on weightlifting or even physical fitness; it is
possible that very few sales were of those that do. Besides, it is entirely possible that in
previous years total sales were even higher and that sales are actually declining. Either
scenario, if true, would serve to weaken the brochure’s claim rather than support it.
Another problem with brochure’s claim involves the fact that more and more consumers are
purchasing home gyms. It is entirely possible that consumers are using home gyms as a
substitute for commercial gyms, and that the number of Power-Lift memberships will decline as
a result. Without ruling out this possibility, the brochure cannot convince me that a new
Power-Lift franchise would be profitable.
A third problem with the brochure’s claim involves its reliance on the fact that 500 Power-Lift
franchises are now in existence. It is entirely possible that the market has become saturated,
and that additional Power-Lift gyms will not be as successful as current ones. Moreover, it is
possible that the number of competing gyms has also increased in tandem with the general
interest in health and fitness. Without addressing this supply-and-demand issue, the brochure
cannot justify its conclusion that a new Power-Lift fran- chise would be a sound investment.
In conclusion, the brochure is unpersuasive as it stands. To strengthen its daim that a new
Power-Lift franchise would be profitable, the brochure should provide stronger evidence that
the general interest in physical fitness, and weightlifting in particular, will continue unabated in
the foreseeable furore. The brochure must also provide evidence that home gyms are not
serving as substitutes for commercial gyms. Finally, to better evaluate the argument we would
need more information about the extent to which the fitness-gym market has become
saturated, not only by Power-Lift franchises but by com peting gyms as well.
Argument 104
The following appeared in a memorandum from the president of Hyper-Go Toy Company.
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"Last year, sales of our Fierce Fighter toy airplane declined sharply, even though the toy had
been a top seller for three years. Our customer surveys show that parents are now more
worried about youthful violence and are concerned about better education for their children.Therefore, to maintain profits we should discontinue all our action toys and focus exclusively
on a new line of educational toys. Several other toy companies have already begun marketing
educational toys and report sales increases last year of 200 percent. And since the average
family income is growing, sales of new Hyper-Go toys should also increase."
In this memo the president of Hyper-Go Toy Company (HG) argues that in order to maintain
profitability the company should discontinue its complete line of action toys and focus
exclusively on a new line of educational toys. To support this argument the president cites the
dramatic decline in sales of HG’s Fierce Fighter (FF) toy airplane, which during the previous
three years had been a top seller, and an HG customer survey indicating increasing concern
among parents about youth violence and for improving their children’s education. The
president also points out that several other toy companies have begun marketing educational
toys and report a 200% increase in overall sales, and that the average family income is
growing. The president’s argument relies on several doubtful assumptions and is therefore
unpersuasive.
First, the president’s assumption that parental concern about youth violence is the cause of
declining FF sales might be unwarranted. The decline might have been caused by one or more
other factors--such as supply or distribution problems, new competing products from other toy
companies, or a waning of interest in FF among children. Without ruling out these and other
possible reasons for the decline, the president’s argument seems ill-conceived.
Secondly, the results of HG’s customer survey are not necessarily representative of the
overall population of toy-buying parents. Perhaps HG’s current customers are more concerned
about youth violence and education than most parents. If so, then the president has
overlooked the possibility that a substantial portion of HG’s target market would not react
favorably to the proposed changes.
Thirdly, perhaps sales of HG’s other action toys remained stable or even increased last year.
In fact, it is entirely possible that some of riG’s other toys are becoming very popular and will
soon replace FF as top sellers. If so, then discontinuing the entire line would be ill-advised
indeed.
Fourth, assuming the toy companies that saw a 200% sales increase last year are
statistically representative of toy companies in general, that increase might be due to
action-toy sales rather than to educational-toy sales. If so, then the statistic would amount to
scant support for the proposed course of action.Finally, the mere fact that average family income is growing provides little assurance that the
proposed changes would increase HG’s sales. Perhaps the average income of families without
young children is growing, but for families with young children who buy toys it is shrinking. For
that matter, perhaps average family expenses are also growing, so that families have even
less discretionary income than before. Without ruling out these possibilities, the president
cannot justify the proposed changes on the basis of the growth of average family income.
In sum, the president’s argument is unconvincing as it stands. To strengthen it the president
must show that parents in general, not just HG customers, are concerned about youth violence
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and education, and that these concerns are the reason for declining FF sales. To better assess
the argument I would need more information about sales trends of HG’s other action toys, and
about the types of toys that have contributed to the 200% increase in sales for the other toy
companies.
Argument 105
The following appeared in a memorandum from a vice president of the Megamart department
store chain.
"For the third year in a row, the average household income in our country has risen significantly.
That prosperity means that families are likely to be spending more time and money on leisure
activities. Megamart stores should therefore concentrate on enlarging and promoting its line of
products typically used in leisure activities: athletic and outdoor equipment, televisions,
gourmet cooking equipment, and luggage and travel accessories."
In this memo the vice president of Megamart concludes that Megamart should expand its
line of products related to leisure activities. To support this claim the memo points out that for
three years in a row the average household income nationwide has risen. However, close
inspection of the argument reveals several logical problems, which render it unconvincing as it
stands.
First of all, the claim relies on two threshold assumptions about rising income. One is that
this trend will continue in the future; if it does not then the proposed course of action is unlikely
to result in increased profits for Megamart. The other threshold assumption is that the cost of
living is not also increasing at least at a commensurate rate. Yet it is entirely possible that living
costs have risen to meet or even exceed the rise in income.
If so, Megamart would in all likelihood sell fewer leisure products than otherwise. Even
assuming that discretionary income is rising and will continue to rise, the argument relies on
the additional assumption that people will spend this discretionary income on leisure products.