GMAT Exam Dumps : Graduate Management Admission Test (2022)

Manufacturers and retailers tend to look askance at gray markets, where products are sold at cut-rate prices outside their authorized distribution channels. Manufacturers fear that gray markets will undercut margins and tarnish brand names. Retailers fear that they will siphon away customers and erode prices.

A new study indicates, however, that gray marketing actually benefits manufacturers and retailers in markets that meet two criteria: first, sharp differences exist in consumers' price sensitivity; second, large numbers of consumers are price-insensitive. In such markets, the low prices of the gray market will attract the most price-sensitive customers. The authorized channels will then compete only for the remaining customers—those who are insensitive to price but sensitive to service.

When that happens, the structure of competition and the economics of the market shift. The authorized retailers, freed from having to cater to the bargain hunters, can raise their prices and focus on service. If the concentration of price-insensitive shoppers is high enough, the resulting increase in prices will more than offset the loss of sales to the bargain hunters. The margins and profits of the authorized retailers will increase, and manufacturers will, as a result, be able to boost their wholesale prices.

Parasitic wasps propagate by injecting their eggs into a caterpillar that then becomes paralyzed as the eggs inside develop into wasp larvae. The wasp larvae kill the caterpillar host as they feed on it, form cocoons, and finally develop into wasps. In attempting to discover how such wasps detect the presence of the caterpillar hosts that are so critical to the wasps' propagation, researchers have uncovered an intriguing defense mechanism developed by the plants on which the caterpillars feed.

When chewed on, many plants release volatile compounds from both damaged and undamaged tissues. When these compounds are toxic to the insects that feed on the plants, they can help defend the plants from such attacks. However, the plants on which the wasps' caterpillar hosts feed have evolved an even more complex defense: the caterpillar-infested plants appear to release volatile chemicals that attract parasitic wasps, which then prey on the caterpillars. Scientists originally suspected that the wasps were attracted by an odor, reminiscent of cut grass, that is released as the caterpillar feeds, but a recent study suggests that a different set of volatile attractants is involved. In this study, when researchers used a razor blade to mimic caterpillar damage on the leaves, only grassy odors were emitted, not the volatile compounds that attracted wasps. However, when oral secretions from the caterpillars were applied to these damaged leaves, the leaves released the wasp attractants several hours later. Further tests revealed that oral secretions placed on the razor-damaged leaves stimulated the release of such attractants, making the plants as attractive to wasps as plants that had suffered actual caterpillar damage. These results suggest that chemicals from the caterpillar must be present for these attractants to be released and that unlike the grassy scent, which emanates only as the caterpillar on the plant, the wasp attractants are produced several hours after the attack and persist for several hours, perhaps days. Researchers have launched additional studies to determine whether the wasps' capacity to prey on caterpillars can be enhanced to the extent that the wasps could be used as a natural pesticide to "police" plants and protect them from crop-destroying caterpillars.