Budweiser, Miller and Coors, together with their subsidiary brands and foreign c

Question

Budweiser, Miller and Coors, together with their subsidiary brands and foreign corporate partner brands produce 80% of all beer consumed in the US. Each spends well over $600 million a year on television advertising campaigns, promoting their beer brands. Do you think these firms would welcome congressional legislation which restricted the amount that any one firm could spend on advertising to $10 million yearly, and thereby allowed them all to reduce their costs dramatically without fear of losing ground to each other? Explain your answer.

Explanation / Answer

no, these firms may not welcome the strategy or decision taken about the limitation of advertising amounts by a firm. advertisements influence the sales of any product, product sales also depends on advertising capacity and campaign of the firm.

in this case, if they limits their advertinsing expenses to $10 million, definitely the sales will be comes down. we can not predict the exact number upto what extent the sales are going to be down, but they will. and if firms think that spending money on advertisements as expenditure, they can limit or minimise it. but they thinks that spending money on advertisements is an investing activity, so they expect returns on it.

if they spend $200 on an add, they will expect an aditional revenue of more than $200. otherwise firms do not spends on ads.

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