Get Moving, a fitness equipment retailer, has been successful in a strong economy by spending 4% of its sales revenues on promotions. What adjustments, if any, should Get Moving make now that the economy has gone into recession?
A) Continue to spend 4% of sales on promotions, even though this results in a lower promotional budget.
B) Increase the promotional budget to attract new customers.
C) Decrease the promotional budget, since no one has any money to spend anyway.
D) Spend 4% of profits on promotions rather than 4% of sales.

Question

Quizplus · Accepted Answer

In a recession, consumers are more conscious of spending, and thus, may need more incentives to make purchases. Therefore, increasing the promotional budget can help attract new customers, retain current ones, and boost sales. Continuing to spend 4% of sales on promotions may result in a lower promotional budget because sales decrease in a recession. Decreasing the promotional budget will lead to decreased awareness of the brand and hence, lesser sales. Spending 4% of profits on promotions may be a good idea in general, but in a recession, profits can also decrease, making this option less effective.

Get Moving, a Fitness Equipment Retailer, Has Been Successful in a Strong