Does effective advertising require a higher budget expense than

Question

Does effective advertising require a higher budget expense than ineffective advertising?

(1) Companies that allocate higher budgets to advertising tend to experience increased sales revenue.

(2) Effective advertising can drive higher consumer demand.

ID: 700328

MartyMurray · Accepted Answer

Does effective advertising require a higher budget expense than ineffective advertising?

Notice that the question stem uses the word "require."

"Require" is an indicator that something is necessary.

So, the question stem is asking whether a higher budget is necessary for effective advertising.

(1) Companies that allocate higher budgets to advertising tend to experience increased sales revenue.

"Increased sales revenue" does not necessarily mean "more effective."

After all, a company that allocates just a small budget to advertising could have some sales revenue, in which case the advertising may be effective, just not very powerful.

So, this choice does not tell us whether effective advertising require a higher budget expense than ineffective advertising. It tells us only that a larger budget can result in more revenue.

Insufficient.

(2) Effective advertising can drive higher consumer demand.

This choice presents a result of effective advertising, "high consumer demand."'

However, we are seeking to determine what is necessary for effective advertising. So, this choice does not help with answering the question at all.

Insufficient.

Statements (1) and (2) combined.

Since neither choice clearly indicates what size budget is necessary for effective advertisiing, combined the choices are not sufficient to answer the question.

Insuffcient.

Correct answer:  E

pierjoejoe · Answer

the question is basically asking if a higher budget is NECESSARY for effective advertisement. in a set like situation the "higher budget" is a set that completely surrounds the "effective advertisement" set, there might be a high budget that leads to non effective adv, but if you don't invest a lot of money --> you will not gain an effective advertisement.

(1) this statement tells us that company that allocate high budget TEND to increase REVENUES. the question does not talk about revenues, but EFFECTIVE ADVERTISMENT. we might say (at the extreme case) that higher revenues are necessary for higher revenues, but in that case too, we don't know if "higher revenues" coincides perfectly with successful advertisement. There might be companies that invested a lot of money, got higher revenues with a NON successful advertisement, and there might be a company that invested a lot of money that did not increase revenues but got a incredible advertisement. NOT SUFFICIENT.

(2) completely out of scope. not sufficient.

Blackcrow1972 · Answer

OFFICIAL EXPLANATION
(1) Even if companies that allocate higher budgets to advertising tend to also have increased sales revenue, that might mean only that their increased sales revenue has given them more money to spend on their ineffective advertising. Furthermore, even those companies allocating high budgets to effective advertising might be doing so inefficiently; they might be able to cut their advertising expenses drastically without reducing their advertising effectiveness. Thus, whether effective advertising requires a higher budget expense than ineffective advertising cannot be determined from (1) alone; NOT sufficient.

(2) Even if effective advertising can drive higher consumer demand, it might not need to cost much. Thus, whether effective advertising requires a higher budget expense than ineffective advertising cannot be determined from (2) alone; NOT sufficient.

Taking (1) and (2) together, even if companies that allocate higher budgets to advertising also tend to have increased sales revenue, and even if effective advertising can drive higher consumer demand, many companies with higher budgets and increased sales revenue may nonetheless be advertising inefficiently; they might be able to cut their advertising expenses drastically without reducing advertising effectiveness. If so, effective advertising may not require a higher budget expense than ineffective advertising.

The correct answer is E; both statements together are still not sufficient.

JustKeepGoing · Answer

Question: budget (effective) > budget (ineffective).....Yes/No???

We need some information like:
Effective advertising → budget = ?
Ineffective advertising → budget = ?

Statement 1 talks about Higher budget → higher sales (correlation) 
It doesn't say anything about whether the advertising is "effective or ineffective". So, insufficient.

Statement 2 states a possibility that Effective advertising "can drive" higher demand 
However, it does not talk about "budget". So, insufficient.

Statement 1+2:  
Higher budget → higher sales
Effective advertising → higher demand
We don't have sufficient information to concretely say which of the two advertising has higher budget expense. So, insufficient.

Answer E

Does effective advertising require a higher budget expense than

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards

GMAT Data Sufficiency (DS) Questions

Does effective advertising require a higher budget expense than

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards