Final answer:
False, economies of scale and large advertising budgets are not as effective in the current competitive landscape due to market saturation, diverse competition, and the evolution of market entry barriers. Advertising efforts can neutralize each other, and a strong brand name, while valuable, may not guarantee market dominance.
Step-by-step explanation:
It's false that economies of scale and huge advertising budgets are just as effective in the new competitive landscape as they were in the past. The current market is highly saturated and diversely competitive, which diminishes the impact that economies of scale and large advertising budgets alone can have. With the emergence of the internet and social media, the barriers to market entry have changed, allowing smaller companies to gain a foothold without necessarily needing huge budgets.
Large advertising budgets can act as a barrier to entry for smaller competitors, especially in cases where established brands like Coca-Cola and Pepsi dominate. However, the effectiveness of such expenditures has limits. Often, advertising costs by competing firms may neutralize each other, leaving no net benefit for the rivals—this is referred to as the neutralization effect in advertising. While a well-respected brand name can still hold considerable sway, it's increasingly challenged by innovative marketing strategies and the rise of niche markets that value different aspects such as sustainability, craftsmanship, or local production.