Which of the Following Is a Disadvantage of Using a Percentage-Of-Sales

question 28

Multiple Choice

Which of the following is a disadvantage of using a percentage-of-sales method to determine the marketing communications budget?

• A) It discourages stability when competing firms spend approximately the same percentage of their sales on communications.
• B) By using a percentage-of-sales method, communication expenditures tend to be extremely high irrespective of what a company can afford.
• C) It discourages management from thinking of the relationship among communication cost, selling price, and profit per unit.
• D) Dependence of the percentage-of-sales method on year-to-year sales fluctuations interferes with long-range planning.
• E) The percentage-of-sales method views sales as the result in itself rather than the determiner of communications.

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Definitions:

Statute of Limitations

A law that sets the maximum period one can wait before filing a lawsuit, depending on the type of case or claim.

Consideration

The value (such as money, services, or goods) that is exchanged between parties in a contract, serving as the essential reason for a party entering into a legal agreement.

Binding Requirement

A legal or formal obligation that parties must adhere to.

Undue Influence

The excessive pressure or influence exerted by one person over another to persuade or coerce them into making decisions that may not be in their best interest.