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Diminishing Returns
The concept that the effectiveness of a marketing lever decreases with repeated use.
Implications
The economic principle that as investment in a particular area increases, the incremental gains or returns from that investment will eventually decrease, often leading to inefficiencies if not managed properly.
Example
Example: A company increases its marketing budget significantly, but after a certain point, the additional spend leads to smaller gains in sales, illustrating the concept of diminishing returns.
Related Terms
Different from economies of scale, which suggest increasing efficiency with scale, diminishing returns occur when additional investment leads to progressively smaller benefits.
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