Why Do Many Brands with a Large Market Share Spend

question 184

Multiple Choice

Why do many brands with a large market share spend proportionally less on advertising compared to brands with small market share?

• A) Beyond a certain volume of promotion,diminishing returns set in.
• B) Certain industries have a practice of spending a low amount of dollars,relative to sales,on advertising.
• C) There is no minimum level of exposure for advertising to have an effect on sales.
• D) Advertising will not stimulate economic growth for the industry.
• E) The firms with large market share do not have to advertise anymore.

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Definitions:

Variance of Returns

A measure of the dispersion or spread of returns on an investment, indicating its volatility.

Investment

The practice of dispensing finances with the goal of making a profit or generating income.

Years

A unit of time equal to 365 days (or 366 days in a leap year) used to measure duration or age.

Total Dollar Return

The overall financial gain or loss on an investment, including capital gains, interest, dividends, and distributions, calculated in absolute dollar terms.