Which of the following statements is true of the factors that affect an advertising budget?

Question

Quizplus · Accepted Answer

New products typically require large advertising budgets to build awareness and generate consumer trial. This is because consumers are not yet familiar with the product or the brand, and advertising helps to create a perception of value and differentiation.

Option A is incorrect, as high-market-share brands may require lower advertising expenditure as a percentage of sales to maintain share, as they may benefit from economies of scale and word-of-mouth promotion by satisfied customers.

Option B is incorrect, as brands in less-differentiated or commodity-like product classes may require higher advertising expenditure to establish a unique image and differentiate themselves from competitors.

Option D is incorrect, as in a market with few competitors and moderate advertising spending, a brand may be able to achieve a strong share of voice and reach consumers effectively with a lower advertising budget.

Option E is incorrect, as established brands may require lower advertising budgets as a ratio to sales, as they may have already built awareness and loyalty among customers.

Which of the Following Statements Is True of the Factors