Which of the following statements provides a good rule of thumb for setting the advertising budget for a new product?
A) Its advertising budget should be equal to that of the largest shareholder in the market.
B) Its advertising budget should be as much as the firm can afford.
C) Its advertising budget should be double that needed to maintain the desired market share.
D) Its advertising budget should be 10 percent greater than the average budget planned for the entire payout period.

Question

Quizplus · Accepted Answer

Setting the advertising budget for a new product is a complex decision, but a good rule of thumb is to allocate a budget that is double that needed to maintain the desired market share. This amount ensures that the product is launched successfully, creates awareness and generates demand among the target audience. It also helps beat competition and builds brand equity. Options A, B, and D are incorrect because they don't take into account the requirements of effective advertising or the competitive nature of the market.

Which of the Following Statements Provides a Good Rule of Thumb