Nike spends $750 million on promotional activity for 50 percent of the domestic athletic shoe market. Reebok, at 17 percent of the market, decides to increase its share to 23 percent by increasing its promotional activity. Reebok estimates that Nike spends $150 million dollars for each 10 percent increment in market share. Reebok increases its current budget by $75 million to capture the extra 5 percent of the market. Budgeting in this manner is called the meeting-competition method.

Question

Quizplus · Accepted Answer

The meeting-competition method involves adjusting a company's promotional budget to match or counter the spending of competitors, as Reebok is doing by increasing its budget to compete with Nike.

Nike Spends $750 Million on Promotional Activity for 50 Percent