The relationship of annual marketing effort to annual sales revenue is assumed to be an S-shaped curve because the sales response function shows:

Question

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The S-shaped curve suggests that there is a point of diminishing returns, where additional marketing effort will have a lesser impact on sales revenue. In the midrange of the curve, a small increase in marketing effort can result in a large increase in sales revenue. At either end of the curve, the impact of additional marketing effort is less significant.

The Relationship of Annual Marketing Effort to Annual Sales Revenue