Question

Tread Inc. is the market leader for sports shoes in the subcontinent of Gavon. Though the brand has not introduced any new product lines over the past decade, its signature products enjoy a high demand and have always remained popular. According to the concept of advertising response function, which of the following should be Tread Inc.'s advertising strategy _________.a.​ Its advertisements should easily affect target consumers' deeply rooted values and attitudes.
b. ​It should spend proportionately less on advertising than on a newer line.
c. ​It should penetrate consumers' perceptual defenses and affect purchase intentions.
d. ​It should have a large budget for advertising expenditures.

Answer 1

Answer: The answer is b

Explanation:

The concept of advertising response function is based on the theory of marginal physical product and shows the relationship between advertising and the level of consumption of the goods by the consumers. The theory of marginal physical product states that when there is a change in total product resulting from one unit change in the quantity of the resources used per unit of time. When average product is increasing ,marginal physical product is greater than average product,when average product is maximum ,marginal physical equals average product .when average product is decreasing marginal physical product is less than average product.The theory of marginal physical product can also be called the law of diminishing return which states that if increasing quantities of one factor of production are used in conjunction with a fixed quantity of other factors then, after a certain point each successive unit of the variable factor will make smaller and smaller addition to the total output. In this case, the law tells the Trend Inc when to stop adding more input of the variable factor to a fixed factor.

Invariably, we are saying that it high time for Trend Inc, should spend proportionately less on advertising than on newer line. It should now spend more money on bringing of new product into the market than spending more on the advertisement of the sport shoes because at a certain point the demand for the old product will fall when diminishing return must have set in on the product demand.