65. In this memorandum, the vice president of Road Food suggests that the company
3 A/ ~: o/ [4 a1 r% G7 emotivate its advertising agency to perform better by basing the agency's pay on the
( o Q5 P9 _/ {4 n# f$ P" o3 pRoad Food's profits. In support of this suggestion, the vice president points out that
8 M- ]7 }7 Y( `8 |2 K* T% Malthough Road Food initially thought the ad agency was following company
) z2 {+ J! l1 O; u6 S* @recommendations, competitor-Street Eats earned higher profits last year. The vice
; V# x( [' ^$ V; `president also notes that Street Eats has fewer restaurants than Road Food, and that
' p. \. }% I: B# V6 b. XRoad Food spent nearly as much money on advertising as Street Eats did. This
: Q/ \ ~5 p$ z/ l' q! b. iargument is unconvincing, since it relies on dubious assumptions and comparisons.+ K: Y& N! L0 X4 J% Y
First, the vice president assumes that the ad campaign caused the low profits. 9 P: g$ ?$ C0 w' G& b! Q0 W$ Q/ W
However, the vice president ignores many other factors that contribute to profitability.
6 z+ ~9 h# d# p4 y9 nIn particular, the fact that Road Food has been spending less advertising money per 6 W& I+ z5 }( |4 Z v
restaurant than Street Eats suggests that its unwillingness to spend more may be the : h Q) f+ k" o1 e8 Q
main reason for disappointing profits.7 s6 h2 M' F+ F4 A# L$ x- X2 t
Second, the author implies that the ad agency failed to implement Road Food's ( ]) m7 F, a% f9 ?$ {0 ?5 x+ @6 E# A
guidelines, and that this failure was the reason for disappointing profits. However, it is - z4 y2 K M$ b) o9 j% H8 H/ @! u
equally possible that the ad agency faithfully followed all suggestions from Road Food,
; ~# v0 g9 o. \+ }9 C' W yand that those suggestions were the cause of the disappointing profits. In this respect,
+ T1 R% k; e, F' z; z! Jthe author unfairly shifts blame from Road Food to the ad agency.
2 Q/ h7 B. N" ]! v! X( ?+ ^ Third, the author's comparison between Road Food and Street Eats is less relevant . }4 {) v& Q2 i! |2 Z4 x
than a comparison between Road Food's own profits prior to its latest ad campaign and
r- }9 }4 s, H3 f: w% {, ] A# hits profits during this campaign. Comparing its own profits during these time periods 1 |, F' n' } X. b% b) `4 L3 o0 c( i2 D
would more accurately reflect the ad agency's effectiveness than comparing profits of
! ]! ]. a% n. G4 \! Ctwo different companies.
0 Q" c0 v8 @3 F Finally, the author assumes that the ad agency will be more motivated if its fee is ' Y% V7 N3 a6 j$ s: u( C
based on Road Food profits. However, the author does not support this claim. In fact,
% i* G. |4 c; b+ ugiven that Road Food's profits have been lower than expected, it is just as likely that the 8 f9 @+ ` z0 X7 }/ e1 ?
ad agency would be less motivated by the suggested fee structure than by some other
# t9 w. ^9 K W. A* lfee structure.. V5 N& @/ X( b2 Z8 t2 t( h+ k
In conclusion, the argument is unconvincing as it stands. To strengthen it, the vice 4 Z: a7 Y3 f! Q1 S' X. Y
president must provide evidence that the ad campaign caused last year's disappointing
9 ]$ S, R8 ?: J5 Z, z: p% L% @6 [profits, and must examine and rule out other factors that may have contributed to ! B7 o- b5 W' z; r8 d8 l0 l, P2 B
disappointing profits. |