How Advertising Impacts on Profitability

Argues that relative advertising expenditure (advertising/sales ratio relative to competitors) helps to build (i) the relative perceived quality of the product or service and (ii) the firm's relative reputation.

How Advertising Impacts on Profitability

Leslie Butterfield

Tom Peters, the celebrated management consultant, describes PIMS as being the worlds most extensive strategic information database. From its genesis at Harvard in 1972, it now encompasses data on over 3,000 companies totalling a massive 20,000 years of business experience! Suffice to say here that the focus for this study was the 200+ companies operating principally in branded consumer products in Europe (see Figure 1).

The IPAs interest in the PIMS database stems from an awareness of the growing demand from senior management for general proofs of the value of...

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