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Many Companies Set Promotion Expenditures at a Specified Percentage of Sales

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Essay

Many companies set promotion expenditures at a specified percentage of sales or of the sales price.What are the advantages and disadvantages of this method?


Definitions:

Conditioned Response

A response acquired through learning to a stimulus that was once neutral but has been frequently paired with a stimulus that elicits an automatic response.

Spontaneous Recovery

The reappearance of a previously extinguished conditioned response after a pause.

Stray Dog

A dog that lives on the streets and is not owned or cared for by a specific person.

Extinction

The gradual reduction and eventual disappearance of a conditioned response following the removal of reinforcement.

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