Brand managers know that increasing promotional budgets
Brand managers know that increasing promotional budgets eventually result in diminishing returns. The first one million dollars typically results in a 26% increase in awareness, while the second million results in adding another 18% and the third million in a 5% increase. Andrews’s product Agape currently has an awareness level of 79% . While an important product for Andrews, Agape’s promotion budget will be reduced to one million dollars for the upcoming year. Assuming that Agape loses one-third of its awareness each year, what will Agape’s awareness level be next year?