Final answer:
Quality control measures are likely the best option to avoid initial problems with P&G's Cheer, enhancing product demand in a monopolistically competitive market without relying solely on advertising. In a perfectly competitive market, aggressive advertising could offer short-term sales boosts but not long-term benefits.
Step-by-step explanation:
The initial problems with Cheer by P&G could possibly have been avoided by implementing quality control measures. Quality control is crucial in ensuring that the product meets the company's standards and customer expectations. When consumers trust a product's quality, demand can increase naturally without the sole reliance on advertising. Moreover, establishing a reputation for quality can make a brand more resilient to competition and less sensitive to price changes.
If we consider that P&G's Cheer is operating in a monopolistically competitive market, increasing demand for their products could include methods such as improving product quality, differentiating the product from competitors, building a strong brand image, and engaging in direct customer communication to build loyalty.
In a perfectly competitive market, aggressive advertising could increase sales in the short run but could also be a less effective strategy in the long term, due to perfect substitutes being available and the inability to create brand loyalty. Additionally, large advertising budgets can sometimes act to discourage competition, as seen with Coca-Cola and Pepsi Cola's promotional budgets creating barriers to entry for new competitors.