Refer to the Passage Below to Answer the Questions That

question 125

Multiple Choice

Refer to the passage below to answer the questions that follow.
You are having dinner with your former college roommate, who is a neurosurgeon. You are an account planner at an advertising agency, and you do a lot of ad testing. You're trying to get him to help you with some neurological tests to determine the effectiveness of some of your clients' ads, especially those that attempt to evoke strong emotional responses. He asks you, "If advertising is done to sell a product, why don't you just measure sales to determine the effectiveness of an ad?" You try to explain to him that it is not that simple, and you tell him about all the types of research you conduct at various stages of a campaign.
-Which of the following is a reason that advertisers use other measures in addition to sales as a measure of advertising effectiveness?

• A) Sales are never an accurate measurement of advertising effectiveness.
• B) Measuring other data is far cheaper than measuring sales.
• C) Manufacturers, and therefore their advertising agencies, do not have access to sales data because it is collected by retailers who don't make that available to them.
• D) Creating higher levels of brand recognition is one of the major objectives of advertising and isn't necessarily reflected in sales.
• E) Advertisers don't normally measure advertising effectiveness with other measures besides sales.

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Definitions:

Herfindahl Index

An index calculating market concentration by summing the squares of the market shares of each firm within the industry.

Conglomerate Merger

A type of merger where two or more firms in unrelated business sectors combine to reduce risk or expand their portfolio.

Monopolizing Market

The practice of a single company or entity dominating a particular market, thereby limiting or eliminating competition.

Behavioralist Approach

A method in economics and finance that studies how psychological influences and behavioral biases affect the decisions of individuals and markets.