Question

If advertising makes consumers more loyal to particular brands, it could ________ the elasticity of demand and ________ the markup of price over marginal cost.

Answer 1

Answer:

The correct answer is Decrease; increase.

Explanation:

One of the issues that brands want to create in their relationship with their consumers is loyalty, loyalty. In a market where products are increasingly more and more varied and in which consumers have more and more offers and can choose between more and more brands, companies aspire to their products and the relationships established between them and their consumers go beyond having a product to fulfill a service. Brands expect and need consumers to bond with them in an emotional way, feel for their products much stronger and much stronger relationships and, therefore, be able to establish a deeper anchor with the brand. What the brands are looking for is, therefore, that the consumer practically does not have to think when choosing a product, that he does not need to consider whether that or the other: he has to stay directly with that of the brand in question because it is the of that brand.