Do you think the cost of marketing communication increases the purchase price for the consumer? Please explain
Answer:
It depends, but generally no.
It's not like a company sells 20,000 widgets for $50 each (for $1,000,000 total) then spends $500,000 worth of ad time and sells 20,000 widgets for $75 (for $1,500,000). what will often happen for example is a company will go from selling 20,000 widgets for $50 each, then buy $500,000 worth of ad time and then sell 40,000 widgets for $40 for a profit of $1,600,000. The logic is the marketplace is very competitive and the companies that advertise heavily are looking to deal with volume and are very concerned about keeping prices low to maximize their market share.
An example of a situation that ads do increase the purchase price for the consumer would be a company that makes luxury items, such as sports cars or jewlery. In that case the ads are meant to make you feel that that item is soooo good that you should happily pay a premium for it.
absolutely all costs are passed on to the consumer including marketing communications
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