Scenario 8-4 American Express Is Dissatisfied with the Degree of Penetration of Penetration

question 30

Multiple Choice

Scenario 8-4
American Express is dissatisfied with the degree of penetration of its Gold Rewards Plus card in the U.S. market. Marketing managers at American Express feel that the firm needs to increase advertising to small entrepreneurial businesses to encourage more acceptance of the card for use in purchasing office supplies and durable goods like computers and office furniture. American Express feels that to accomplish the goal of increased penetration in this sector, the budget should be based on communications objectives aimed at certain target markets.
-(Scenario 8-4) The marketers are keenly aware that many budgeting methods fail to address the objectives originally set and relate these to the dollars to be spent.Which budgeting technique is American Express ultimately most likely to use,based on this awareness and the information in this scenario? 

• A) Share-of-market approach 
• B) Objective-and-task approach 
• C) Percentage-of-sales approach 
• D) Share-of-voice approach

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Definitions:

Labor Demand Curve

Represents the relationship between the quantity of labor that employers are willing to hire and the wage rate, typically sloping downward from left to right.

Profit-Maximizing Firm

A business that adjusts its production and sale strategies to achieve the highest possible profit.

MRP = MRC

This equation stands for Marginal Revenue Product equals Marginal Resource Cost, a condition for profit maximization in firms, indicating the most efficient level of output where the cost of the last unit of input equals the revenue it generates.

Wage Rate

The amount of compensation paid to labor per unit of time, which can vary based on factors such as industry, location, and level of skill.