Question

1. A local hardware store owner is preparing an annual advertising budget for his firm. While doing so, he considers his competitors' budgets as benchmarks and uses them to make specific allocations to the promotion mix in his budget. He believes that other established hardware firms in the industry know what they are doing and have goals similar to his. Based on these factors, which of the following methods for establishing an advertising budget is he most likely to use?

   		The all-you-can-afford approach
   		The task approach
   		The competitive parity approach
   		The research approach

Answer 1

Question=A local hardware store owner is preparing an annual advertising budget for his firm. While doing so, he considers his competitors' budgets as benchmarks and uses them to make specific allocations to the promotion mix in his budget. He believes that other established hardware firms in the industry know what they are doing and have goals similar to his. Based on these factors, which of the following methods for establishing an advertising budget is he most likely to use?

Answer= competitive parity approach

Reason=Competitive parity approach is a method of advertising expense budgeting in which the advertising budgets are estimated on the basis of the estimated spending of the competitors. This method has the assumption that the other organizations operating in the industry have the similar marketing goals and these are quite aware of the things being done by them

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