EBK PRINCIPLES OF MARKETING
17th Edition
ISBN: 9780134461434
Author: Armstrong
Publisher: YUZU
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Chapter 14, Problem 14.14AC
Summary Introduction
Case summary:
By using the percent of sales approach the advertisers can set their budget at a specific percentage on the forecasted and current sales. But there are no clear percentage to use. So marketers will look into the competitors spending and industry average for the purpose of comparison.
The details of these two will be available in the in websites to guide the marketers.
To discuss: The reason why there is a difference among the industry average and competitors after analyzing two competing companies advertising-to-sales ratio with that of industry advertising-to-sales ratio.
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Using the percent of sales method, an advertiser sets its budget at a certain percentage of current or forecasted sales. However, determining what percentage to use is not always clear. Many marketers look at industry averages and competitor spending for comparisons. Websites and trade publications publish data regarding industry averages to guide marketers in setting the percentage to use.
Find industry advertising-to-sales ratio data. Why do some industries have higher advertising-to-sales ratios than others?
Determine the advertising-to-sales ratios for two competing companies and compare them to the industry advertising-to-sales ratio found above. Why do you think there is a difference between competitors and the industry average?
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