ABSTRACT

Advertising is the most common type of promotional activity but there are two main types of advertising: informative and promotional. Gifts, prizes, special offers and free samples are widely used and together with advertising their purpose in the short term is to increase the sales of products currently in the firm's catalogue beyond the level consumers would normally purchase. It is a basic premise of traditional economic theory that the firm's total revenue function and demand function are known to its decision makers so that it is assumed the firm has the available information on the relationship between its total revenue and the quantity of goods and services it sells. There are obviously many variables which influence the demand for a commodity: its price, the price of substitutes, the income of prospective purchasers and of course the nature of the commodity itself is crucial in determining consumer behaviour.