Scenario 8-3 After Working as an Account Executive in an Advertising Agency

question 57

Multiple Choice

Scenario 8-3
After working as an account executive in an advertising agency for 20 years, you've decided you want to own your own business. You buy Springfield Hardware, a neighborhood hardware store, from a man who has owned and run the business for the past 52 years. He sells you the store and its entire inventory, but with one warning-he wasn't much on paperwork, so there won't be a lot of records to be found. You buy the store and begin to create your ad plan.
-(Scenario 8-3) Your goals are very important at this stage,and you want to avoid budgeting methods that neglect to consider goals.This means that you can cross off one approach that is notorious for failing to relate advertising dollars to advertising objectives,and since you have no past records,this method would be impossible to implement anyway.Which of the following methods is this? 

• A) share-of-market approach 
• B) share-of-voice approach 
• C) percentage-of-sales approach 
• D) objective-and-task approach

---

Definitions:

After-Tax Discount Rate

The rate of return after taxes have been calculated, used in evaluating the profitability of investment opportunities.

Income Tax Rate

The rate at which income is taxed for a person or a company.

Working Capital

The difference between a company's current assets and current liabilities, indicating its short-term financial health.

Straight-Line Depreciation

This is a method of allocating an asset's cost evenly across its useful life.