JIT is often used to force inventory back up the pipeline and ...

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JIT is often used to force inventory back up the pipeline and therefore does not reduce inventory.
 
 Indicate whether the statement is true or false

Question 2

Describe the short- and long-term financial effects of advertising.

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Answer to Question 1

False

Answer to Question 2

Not unreasonably, advertising is expected to generate sales and profitability, but demonstrating this effect on the bottom line is rather complicated. Occasionally, increases in short-term sales can be observed during an advertising campaign. But marketers have learned that, if your goal is only to increase sales, nothing's quicker than a price promotion. The financial impact is difficult to assess because advertising is complicated and thought to operate in a longer-term manner. By long-term, we mean both that the effects of the ad might not appear immediately and also that the effects are sustained long after the ad exposure. Advertising effects might not appear immediately because they are cumulative and therefore difficult to attribute to a single ad campaign that was run five years ago. Ad results are sustained because, when used in this manner, the role of advertising is to strengthen brand awareness, positive attitudes, perceptions of brand equity, and so on. In turn, these enhanced attitudes become manifest in behaviors: more purchases, more expensive purchases, more frequent purchases, and word-of-mouth among the target customers. So, even though a CMO typically does not see an immediate sales bump from an ad campaign, everyone knows that advertising works and that the brand needs it. So we keep investing in advertising.