Final answer:
Both A and B statements are true when contextualized. Sales promotions can generate a quick response but may not always build a strong positive brand image. Advertising has a slower response but is essential for long-term brand image development and differentiation in the market.
Step-by-step explanation:
Considering the information provided, the statement C.) Both A and B are true is correct. Sales promotions typically offer immediate incentives to buy, which can lead to a fast response from consumers. They may not, however, always help in building a strong positive brand image, as they are often temporary and designed to prompt immediate sales, which may imply lower quality or value in the minds of consumers. Meanwhile, advertising tends to have a slower response rate but plays a critical role in building a brand image over the long term. Commercials, for example, often use attractive models or familiar logos to make the product seem more appealing and to differentiate it from competitors, thereby strengthening the brand's image and customer loyalty over time.
Furthermore, the concepts of monopolistic competition outlined attest to the power of advertising in differentiating products, making demand more inelastic, or shifting the demand curve to the right, which can help solidify the brand image and lead to increased profits. Considering the sheer scale of advertising budgets for major brands like Coca-Cola and Pepsi, it is evident that strong brand recognition and customer preference, built through consistent and widespread advertising, can be a significant barrier for new competitors.