Original scientific paper

Impact of Promotional Costs on Company’s Profitability

Ljerka Markota ; RRiF plus d.o.o., Zagreb, Croatia
Željana Aljinović Barać orcid.org/0000-0002-8090-4186 ; University of Split, Faculty of Economics, Split, Croatia
Vinka Knezović ; University of Split, Faculty of Economics, Split, Croatia

Abstract

The purpose of this paper is to theoretically identify and delineate the specifics of various costs of promotion and to assess their influence on company’s profitability, assuming that the companies that invest more in promotional activities generate higher income and more profit. In addition, the current study will examine whether there is a difference in the amount of investment in promotion with respect to the legal structure and the size of the company, starting from the assumption that large enterprises and public limited companies have more funds at their disposal, and consequently invest more in promotional activities. The study was conducted on a random sample of 67 companies in 2012, and the obtained results show that the share of promotion in the overall costs significantly affects company’s profitability, while there is no significant difference in promotional investment neither regarding the legal structure nor the size of the company.

Keywords

promotional costs; profitability; company size; legal structure

Hrčak ID:

153496

URI

https://hrcak.srce.hr/153496

Publication date:

31.12.2015.

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