Why do brands with a large market share spend proportionally less on advertising compared to brands with a small market share?
a. Diminishing returns set in beyond a certain level of spending for advertising.
b. Certain industries have a practice of spending more for sales than for advertising.
c. A minimum level of exposure is required for advertising to have an effect on sales.
d. Advertising will not stimulate economic growth for the industry.
ANSWER: a
New brands with small market share tend to spend proportionately more for advertising and sales promotion than those with a large market share because beyond a certain volume of promotion, diminishing returns set in.
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