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Advertising and Sustained Fair Value: The Capitalisation of Brand Intangibles - Essay Example
Author : christarice
Finance & Accounting
Pages 23 (5773 words)
The paper operates mainly based on research question which can be stated as follows: Does advertising create sustained fair value? Advertising is generally viewed as any paid form of non-personal communications about the product, services or ideas by an identified sponsor…
The paper tells that in the last 15 years, the importance of knowledge-based assets and other intangibles has become one of the key factors driving global economic activity. This transformation influences the conduct of business, the manner in which corporate reporting is performed, and the valuation of intangible assets of a corporation. However, there are counter positions ascertaining that intangible assets are useful only in so far as they contribute to the wealth production of the organisation and that intangibles affecting the conduct of the market is not something new, but a known historical fact. Through advertising, organisations and manufacturers carefully convey their message to the target market, which is to sell and try their products, services and idea. As such, selling commodities, services or ideas are the primary purpose of advertising. In this sense, advertising is an essential tool that is employed by corporations in order to increase sales. Increase in sales though advertising is attained with the supposition that advertising provides the venue wherein the product of the organization becomes known in the market, thus, opening the market for the product or if it is already in the market, increasing the market share. With an increase in the market share of the product, services or ideas, there is an increase in the sales, which in turns maximises shareholders’ wealth. ...