According to the competitive parity budgeting method, the firm:
A) allocates some portion of planned sales for the period to advertising
B) spends the same total amount as its major competitors spend
C) matches the competition's percentage-of-sales expenditures
D) spends as much as it can

Question

Quizplus · Accepted Answer

The competitive parity budgeting method involves matching the percentage of sales expenditures of the firm's major competitors. This approach ensures that the firm is allocating a similar proportion of its revenue to advertising as its rivals and avoids investing too much or too little in advertising compared to the industry norms.

According to the Competitive Parity Budgeting Method, the Firm