Sub: Economics

Topic: Micro Economics

Question: Effective decisions of an advertising agency based on economics concepts.

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prepare a short paper which relates how specific material from economic course where we cover supply and demand, elasticity and etc. that is covered in economics class, could help you make more effective decisions for advertising agency. I am looking for something specific, not the generality that knowing economics is helpful. Choose something that has already occurred or may occur in the future. To reinforce your self assessment, include some external documentation in which some other business decision maker encountered a similar situation.

Solution:
Introduction: An ad agency is basically a service business which focuses on creating, planning, and handling advertising for its clients. The ad agency is normally independent from the client and gives us an outsiders point of view to the effort made in selling the clients product or service. An agency could thus be handling the sales promotions for the product or service of the client. Ad agencies include business and corporations, nonprofit organizations and government agencies. Advertising agencies come in different sizes and include anything from a one or two person shop to a small or medium sized agency to large independent agencies to multinational, multi agency conglomerates such as Omnicom Group, WPP Group and Havas. When relating economics to helping effective decisions for ad agencies, we can focus on
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Sub: Economics

Topic: Micro Economics

the type of market- monopolistic competition, oligopoly product differentiation the state of the industry the profit and loss of a firm Market situations and market segments. Demand and supply of the product Demand and supply of close substitutes(market rivals) Elasticity of demand and supply

And advertisement agency, while choosing a client, will look at several factors- these would include the net worth of the client, how much they are willing to pay for advertizing and also the extent of their product market as well as the product range. Some products or services are extremely specialized and open to a specific section of people, such as pharmaceuticals, fertilizers or industrial products and would require a specific type of advertizing. Other products or services are open and hence the kind of advertizing would vary, as in the case of a product such as a soft drink etc.

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ClassOf1 provides exert guidance for College, Graduate and High school homework and live online tutoring on subjects like Finance, Marketing, Statistics, Economics and others. Check out more solved problems in our Solution Library.

www.classof1.com

*The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not for
submitting the same in lieu of your academic submissions for grades.