AllClean knows that it produces and sells very effective laundry detergent. NotQ

Question

AllClean knows that it produces and sells very effective laundry detergent. NotQuiteWhite knows that it produces and sells ineffective laundry detergent. According to the signaling theory of advertising,

Question options:

both AllClean and NotQuiteWhite have incentives to spend large amounts of money on advertising their products.

NotQuiteWhite has an incentive to spend a large amount of money on advertising its detergent, but AllClean does not.

AllClean has an incentive to spend a large amount of money on advertising its detergent, but NotQuiteWhite does not.

neither AllClean nor NotQuiteWhite has an incentive to spend a large amount of money on advertising their detergents.

both AllClean and NotQuiteWhite have incentives to spend large amounts of money on advertising their products.

NotQuiteWhite has an incentive to spend a large amount of money on advertising its detergent, but AllClean does not.

AllClean has an incentive to spend a large amount of money on advertising its detergent, but NotQuiteWhite does not.

neither AllClean nor NotQuiteWhite has an incentive to spend a large amount of money on advertising their detergents.

Explanation / Answer

Answer is 3

AllClean has an incentive to spend a large amount of money on advertising its detergent, but NotQuiteWhite does not.

Signaling theory suggests that heavy advertising spending for an unknown brand may be ineffective in signaling quality because the brand has no reputation at stake but reputable brands, may be able to successfully signal quality by strong spending on advertising.

Answer is 3

AllClean has an incentive to spend a large amount of money on advertising its detergent, but NotQuiteWhite does not.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.