Advertising: Its Place in Political and Managerial Economics by W. Duncan. Reekie

April 3, 2017 | Sales | By admin | 0 Comments

By W. Duncan. Reekie

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Thirdly, if an advertising medium provides good and efficient coverage of an advertiser's target market, then that advertiser cannot afford not to use the medium, irrespective of its editorial content. Possibly then, freedom of speech is not impaired as might be feared. Nonetheless it would be idle to pretend that the danger does not exist. There is another view to the issue, which is that advertising increases freedom of speech. For example, in a shrinking Social and Ethical Problems 29 world, more and more people are concerned about national and international issues.

One other model which has been suggested takes several of these points into consideration. This is Verdoorn's model for determining the firm's optimal input mix. {2) It wholly overcomes objections 1, 2 and 3, and, at least partially, objection 6. The basic model is shown in Fig. 2. Cost and gross revenue are plotted on the y-axis, quantity sold, on the x-axis. One particular selling price is selected. ) Quantity sold Fig. 2 Source: Verdoorn, op. cit. 34 Advertising being given, the total-revenue curve is a straight line passing through the origin, revenue varying directly with sales.

There is 38 Advertising no reason why some arbitrary and consistent percentage of sales will achieve this aim. The approach rests on some other illogicalities also, particularly with regard to the sales base from which the budget is calculated. The use of future sales as the base from which to calculate the percentage has at least some rationale. ) The same cannot be said for the use of past sales. Advertising is meant to cause sales in the future, not be the result of sales in the past. Yet this is the implication when budgets are set at some percentage of past sales.

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