Marketing and Profit Generation Research 2022

Running head: MARKETING AND PROFIT GENERATION
Relationship between Advertisement and Generation of Profits
Name of the Student:
Name of the University:
Author Note:

MARKETING AND PROFIT GENERATION
1
Field of research:
Advertisement has direct impact on the profit generated by the multinational companies
in the global market. Multinational companies like Procter & Gamble have to bear immense
expenditure while operating in the global market right from the cost of branch operations to
advertisement expenses to market their products. The costs of operations which multinational
companies have to bear like salary expenses and marketing expenses always tends to increase.
The multinational companies, most of which are listed companies need to acquire immense
capital from the investors to fund their operations. Thus, as a result they have to insure that they
give back high returns on investments to shareholders in order to able to generate further capital.
This means the global business organizations have to earn super normal profits in order to be
able to diversify business operational expenses, give back high ROI to investors and ensure that
they are able to enjoy immense net profit after taxes which they would be able to mobilize back
into operations. Advertisement of goods and services in the global market enables the business
organizations to create awareness among consumers which in turn attract customers towards
them. Thus, advertisement enables the companies to generate high revenue over they are able to
diversify their expenses and losses and yet enjoy high net profits. The graph below shows the
gross profit and net sales which P&G is earning show a decreasing trend. The net earnings or net
profit of the company also shows a decreasing trend. This fall in the net sales, gross profit and
consequent net profits can be attributed to falling expenses which the company can attribute to
the falling advertising expenses. Thus, it can be established on the basis of the analysis that
advertisement has direct impact on the net profits generated. That is why multinational
companies in order to generate high revenue and consequent high profits incur advertisement
expenses.