To employ the profit-maximization rule for budget setting,the advertising decision maker must know the _____ for every brand for which a budgeting decision will be made.
A) consumer-response factors
B) sales-to-advertising response function
C) availability ratio
D) return on investment calculation
E) hierarchy-of-effects model

Question

To employ the profit-maximization rule for budget setting,the advertising decision maker must know the _____ for every brand for which a budgeting decision will be made.
A) consumer-response factors 
B) sales-to-advertising response function 
C) availability ratio 
D) return on investment calculation 
E) hierarchy-of-effects model

Quizplus · Accepted Answer

The profit-maximization rule for budget setting involves determining the optimal level of advertising spending based on the sales-to-advertising response function, which reflects the relationship between advertising expenditures and resulting sales. Therefore, the decision maker must know the sales-to-advertising response function for each brand in order to set an appropriate budget level. Consumer-response factors, availability ratio, return on investment calculation, and hierarchy-of-effects model may also be useful in making budgeting decisions, but they are not as directly relevant to the profit-maximization rule.

To Employ the Profit-Maximization Rule for Budget Setting,the Advertising Decision