Question

The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $5,600. Marketing studies indicate that such a campaign would increase sales in the Medical market by $49,000 or increase sales in the Dental market by $42,000. Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign?

Answer 1

Answer:

Advertising Campaigns form part of Indirect Costs in an Income Statement.

It could be described as Marketing Costs, Adverts Costs or Adverts and promotion Costs. They all represent the same thing.

Advert costs are initiated to boost or build the equity of a brand, thus making it resonate freely in the minds of Consumers to enhance repeat purchases from them.

1. Implementation of Advert in the Medical Market

Changes to company's Profit $43,400

2. Implementation of Advert in the Dental Market

Changes to company's Profit $36,400

3 Advertising in the Medical Market yields a better profit. i would recommend advertising in the Medical Market

Explanation:

1. Implementation of Advert in the Medical Market

Increased Sales projections $49,000

Less Advert Costs -$5,600

Changes to company's Profit $43,400

2. Implementation of Advert in the Dental Market

Increased Sales projections $42,000

Less Advert Costs -$5,600

Changes to company's Profit $36,400

3. Going by the changes in Company Profit

The advertisement in the Medical Market yields a better profit. i would recommend advertising in the Medical Market