medium · GMAT Verbal Reasoning
A technology company introduced a high-end 'Pro' model of its smartphone in order to boost the brand's prestige. Although the 'Pro' model itself sold well, the company's overall revenue for the period decreased.
Which of the following, if true, best explains this discrepancy?
- The 'Pro' model received glowing reviews from technology critics, who praised its innovative camera, faster processor, and other premium features at launch.
- The company sharply increased its overall marketing budget for the launch of the new 'Pro' model, spending heavily on advertising across many channels.
- The production cost per unit of the 'Pro' model was much higher than that of any of the company's previous models, owing to its premium components.
- Several competitors lowered the prices of their own flagship phones during the same period, intensifying the pressure on the company's other lines.
- Releasing the 'Pro' model cannibalized sales of the company's higher-volume mid-range models, which had previously generated the bulk of revenue.
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