A local hardware store owner is preparing an annual advertising budget for his firm.While doing so,he considers his competitors' budgets as benchmarks and uses them to make specific allocations to the promotion mix in his budget.He believes that other established hardware firms in the industry know what they are doing and have goals similar to his.Based on these factors,which of the following methods for establishing an advertising budget is he most likely to use?

Question

Quizplus · Accepted Answer

The hardware store owner is using his competitors' budgets as benchmarks and considering them while making specific allocations to the promotion mix. This indicates that he is using the competitive parity approach for establishing his advertising budget. The competitive parity approach involves setting the advertising budget to match the competitors' spending levels, which is exactly what the hardware store owner is doing.

A Local Hardware Store Owner Is Preparing an Annual Advertising