In the memo cited, the director of Top Dog Stores argues that the store should start posting ads in Exotic Pets Monthly so that the store would gain more profit. Although it seems like Dog Pet Store would reverse the current declining sales, this statement is brought about with several faults.
The director includes inadequate information in his claim that Fish Emporium gains 15 percent sales after publicizing ads in the magazine. First, this data is calculated up to five years ago, when it could no longer enlighten any useful reasoning today. Second, business is changing in an incredible speed. A firm used to dominate its part of business could suddenly claim bankruptcy in one month or two. Even though Fish emporium could have arguably increase its sale by 1 5percent, such rising may win no advantage under possible tremendous inflation of the whole economy. Third, the bare number of 15 percent does not indicate precisely the store’s performance because we are not told whether the increase of 15 percent is referring to monetary account or inventory account. If, for example, Fish Emporium has sold 15 percent more fish at only 60 percent unit price, the store is in fact losing its money.
Even though Fish Emporium verifiably collects 15 percent more profit soon after posting ads in the magazine, the director should not mistakenly conclude the causation of two seemingly attributable random observations. It is highly probable that while signing an advertising contract with the magazine, Fish Emporium, as exemplified above, lowers prices of its products, amount that capable to attract more customers while not significant enough to cause an negative impact on its sales. Such discount could also contribute, more effective than advertising strategy, to inflating sales of Fish Emporium. Thus if this scenario stands, the director of Top Dog Stores should not arbitrarily conduct before further analysis of Fish Emporium’s success.
Finally, even given that the director could provide solid evidence to justify that the strategy of advertising does result in ameliorating of company’s performance, the assumption that a same strategy
should be applicable in different companies is in short of legitimacy. Before contracting with Exotic Pets Monthly, the director should implement a comprehensive survey that insightfully investigates his customers’ taste on daily magazine reading. If his customers have never even heard about Exotic Pets Monthly, it would be meaningless to invest any marketing budget in that magazine. Hence the director needs to introduce methods to gain statistical data on his customers' preference before put the ads project into progress.
In sum, the argument’s context-lacking understanding of data, failure to rule out alternative causation of improvement, and unreasonable conclusion to conduct a certain plan leave it far from flawless.