A marketing firm decides to purchase media time in an attempt to sell its new product.After purchasing approximately $1 million dollars of time,it has noticed no impact on the sales of the product.However,at $3 million,a substantial increase is shown.This might best be explained by:
A)arbitrary allocation method.
B)the objective and task method.
C)competitive parity method.
D)an S-shaped response function.
E)rapidly diminishing returns.

Question

Quizplus · Accepted Answer

The S-shaped response function suggests that there is a minimum level of advertising spend below which there is no impact on sales, and above which an increasing level of spending will have a progressively greater impact on sales, but only up to a certain point where the impact levels off. This explains why there was no impact at $1 million but a substantial increase at $3 million.

A Marketing Firm Decides to Purchase Media Time in an Attempt