Q1 RESOURCE ALLOCATION
Q1 RESOURCE ALLOCATION PRINCIPLE CONCEPTUAL
Economists would most likely recommend that marketing managers allocate the firm’s marketing resources to the markets and products in which:
- the firm has had the most experience with a product.
- an SBU is considered a cash cow.
- there is the greatest current market share and the fastest, growing industry rate.
- the excess of incremental revenues over incremental costs is greatest.
- total revenue equals total cost.
Q2 SALES RESPONSE FUNCTION CONCEPTUAL
The relationship of annual marketing effort to annual sales revenue is assumed to be an S-shaped curve because the sales response function shows:
- that when demand diminishes, production costs rise.
- an additional $1 of marketing effort results in a far greater increase in sales revenue in the mid-range than at either end.
- the point at which total revenue and total cost are equal.
- decreasing costs as a result of marketing economies of scale.
- increasing costs as a result of the attempt to gain additional market share.
Q3 SALES RESPONSE FUNCTION CONCEPTUAL
The S-shaped curve of a sales response function is due to:
- rising production costs and diminishing demand.
- reduced cost and increasing marginal returns.
- initially increasing and then diminishing marginal returns of additional marketing expenditures.
- decreasing costs as a result of marketing economies of scale.
- increasing costs associated with attaining additional market share.
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