Advertising Promotion and Other Aspects of Integrated Marketing Communications 9th Edition by Terence Shimp, Craig Andrews

Exercise 10

In the context of the discussion of price and advertising elasticities, four situations were presented by comparing whether price or advertising elasticity is stronger. Situation 2 was characterized as "build image via increased advertising." In your own terms, explain why in this situation it is more profitable to spend relatively more on advertising rather than reduce a brand's price.