Question

For each following pairs of firms, explain which firm would be more likely to engage in advertising:

a. A family-owned fruit stall or a family-owned restaurant

b. A manufacturer of forklifts or a manufacturer of cars

c. A company that invented a very reliable watch or a company that invented watch that costs the same amount to make

Answer 1

a. A family owned restaurant would be more likely to enage in advertising than a family owned fruit stall.
Because we can see fruit stall here and there on road side. It does not need any advertisrment to attract consumers. But for a restaurant, it is difficult to catch up the consumers. They can attract customers by advertising about variety and modern food and weekly offers that provided by the restaurant.
b. Manufacturer of car would be more likely to engage in advertising than manufacturer of folklifts Because new innovation model are introduced in cars than forklifts. In ordet to reach the client about the information regarding new model and branded cars, the manufacturer of cars would engage in advertising
c. A company that invented a very reliable watch would likely to enage in advertising than a company that invented watch that costs the same amount to make. The second company is just producing a watch only. There is no any competition for them. In order to compete with other watch companies, a company that invented a very reliable watch would have to engage in advertising to attract market demand