Published by:
Harvard Business Publishing
Length: 12 pages
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Abstract
Coordination between advertising and price strategies may lead to higher profits. Analyses of data from 227 businesses show the price- advertising relationship. The results show that companies with higher advertising budgets charge premium prices; consumers are willing to pay more for a perceived "high quality" product; and the association between advertising expenditures and price is strongest in the last stage of the product cycle. The price-advertising consistency principle is important for attaining a substantial return on investment.
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Abstract
Coordination between advertising and price strategies may lead to higher profits. Analyses of data from 227 businesses show the price- advertising relationship. The results show that companies with higher advertising budgets charge premium prices; consumers are willing to pay more for a perceived "high quality" product; and the association between advertising expenditures and price is strongest in the last stage of the product cycle. The price-advertising consistency principle is important for attaining a substantial return on investment.