Get Moving, a fitness equipment retailer, has been successful in a strong econom

Question

Get Moving, a fitness equipment retailer, has been successful in a strong economy by spending 4% of its sales revenues on promotions.  What adjustments, if any, should Get Moving make now that the economy has gone into recession?

Spend 4% of profits on promotions rather than 4% of sales.

Decrease the promotional budget.  No one has any money to spend anyway.

Continue to spend 4% of sales on promotions, even though this results in a lower promotional budget.

Increase the promotional budget to attract new customers

Spend 4% of profits on promotions rather than 4% of sales.

Decrease the promotional budget.  No one has any money to spend anyway.

Continue to spend 4% of sales on promotions, even though this results in a lower promotional budget.

Increase the promotional budget to attract new customers

Explanation / Answer

a> Spend 4% of profits on promotions rather than 4% of sales.

Reason

When the sale is changed to profit, we can expect a lower promotion budget as the profit will be lower, thus this should be the right strategy in a recession.

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