When it comes to advertising, most options can be quite expensive, which is why it is necessary to have a formal advertising budget.
An organization's allotment of promotional costs over a predetermined time frame is known as an advertising budget. It is a gauge of how much money a business plans to spend on achieving its marketing goals. The advertising budget is the point in an organization's operational planning when its strategic marketing objectives and cost-benefit analysis coincide. An economic principle known as the Dorfman-Steiner Rule maximises the cost of advertising. According to the theorem, a business can increase income by investing in advertising or lowering the cost of a good.
According to the Dorfman-Steiner Rule, a company's advertising spending is at its profit-maximizing equilibrium when an extra dollar of advertising simply results in an extra dollar of net revenue. The Dorfman-Steiner rule only applies to monopolists who seek to maximise profits.
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