Increased Selling Costs vs, Price-Cutting
We have mentioned before that apart from improving quality. there are two methods of increasing the sale or output. rh .. reducing the price or increasing selling costs ii.e .. spending more money on advertising and salesmanship) two nltc matics, which is better’} t IS obvious that. froll’ the point’ view of the buying public. price reduction I’ much better, whereas advert •.cmcnt, at any 1••le some advertisement. lIlay
be regarded an economic waste. from tlie point of view of the individual businessman, advertisement is better than price-cutting. Advertisement can be stopped if it docs not produce results. whereas it is wise to raise the price again once it has been reduced. i regarded as professionally unethical. whereas nobody objects to advertisement. Further. business captured by the crude method of price reduction may be snatched away by a larger price reduction by the rivals, But advertising seeks to create a delusion ill the minds of the customers in favour of the advertised product. To the extent it succeeds. the gain is perm anent.
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