Effect of Advertising Expenses and Sales Incentives on Financial Performance: Dissecting the Cases of Two Market Leaders

Abstract

There has been much interest among academicians and practitioners to understand the role of marketing expenses in contributing to the financial performance of organizations. Especially, in times of recession, budget reduction, or market contraction, marketing budgets get the major cut. However, organizations continue to spend millions in the development and execution of marketing programs. This paper examines the effect of advertising and sales incentives on the revenue and profit of Grameenphone and bKash, who are the market leaders in their respective industries of Bangladesh. With the help of secondary data, it has been found that there is a negative relationship between advertising and financial performance (i.e. revenue and profit), but sales incentives on the other hand have a positive relationship with revenue and profit.