Question

Increasing the promotional budget for a product in order to increase awareness is not advisable in the short run under which of the following circumstances?

One or more competitor has increased price
Demand in the segment is increasing
Accessibility is less than 80%
Production capacity is maxed out (200% plant utilization) and the company is stocking out of the product

Answer 1

Production capacity is maxed out (200% plant utilization) and the company is stocking out of the product

Step-by-step explanation:

If you are already maxed out on production capacity and you are running out of stock, you´ll end up spending money on a product that was going to run out of the shelves any way, so there´s no point in spending that extra money in promotion, if the competition has increased price, the demand is increasing or accesibility is less than 80% those options would make for a great reason for increasing promotional budget. So the one in which is not advisable in the short run would be Production capacity is maxed out (200% plant utilization) and the company is stocking out of the product

Answer 2

In a situation where production capacity is maxed out (200% plant utilization) and the company is stocking out of the product, it is not advisable in the short run to increase the promotional budget for the product in a bid to increase awareness.