 Adds Value:

 How does advertising affect the value of

product.( Making product better known-
Desirable to consumer-thus adds value)
 Value to both consumer and
advertiser(focusing on self interest)
 Advertised product cost more than non
advertised
II. Completion lowers price(Criticism)
III. Adv is element of mass distribution system-
which in turn lowers cost of product.
IV. Subject to Government price regulation –no
effect on price
V. In retailing ,price is prominent
VI. In national advertisers stresses features
 It do effect
 But very small n newcomers cannot compete
with very large firms(immense budget)
 Some firms eliminated from advertising who
work less effectively
II. Adv affect aggregate consumption.
III. Give info n increase primary demand
IV. Freedom to advertise-more sellers- give more
choices
 What effect does it have on consumer choice and
overall business cycle.
 Relationship of adv and GDP
 Maintaining consumer demand adv sustain
employment and income
 Adv helps to maintain business cycle(recession-
adv works)
 Cock of bottle include about a penny for
advertising
 $20,000 include $400
 Adv informs consumer(Complete info)
 Allows companies to compete more effectively
(Self Interest)
 Competition results in lower price and better
products
 Advertising must meet consumers approval
 Does advertising make us more materialistic
 Deception: Little PUFF OK---Puffery
 Manipulating psychologically
 Consumers are captured prey-helpless in jaws
of marketing predators
 Does it force us buy things we don’t need
 How does it affect the art and culture of society
 Does advertising debase our language
 It gives consumer wider choice
 Encouraging mass production-lowers price
 Encourages acceptance of new product n
technology-development
 Promote healthy competition
 Promote standard of living-subsidize arts
 Disseminate public info on heath n social issues
 Adv create externalities that interfere media n
their editorial statement
 Self interest of both consumer n marketer
 Children's TV
Watching Behavior

Children ages 2-11 watch 80% of all advertising

an average of targeted to children falls
22 hours of TV per week in four
and see 30,000 product categories:
commercials per year
Toys, cereal, candy &
fast food restaurants
 Advocates Argue That Children:

Cannot differentiate
Lack the knowledge and skills
between programs and
to evaluate advertising claims
commercials

Marketers Argue Children:

Must learn Must acquire skills needed to

through socialization function in the marketplace
 Provides information

Encourages higher standard of living

Proponent
arguments Promotes competition

Helps new firms enter a market

Creates jobs

More propaganda than information

Creates consumer needs, wants

Critic arguments
Promotes materialism, insecurity,
and greed
 a) Economic Benefits of Advertising

 Informing people about the availability of

rationally(Realistically) - improvements
 helping them to make informed
 prudent consumer decisions,
 contributing to efficiency and the lowering of
prices

 stimulating economic progress via expansion of

business and trade-creation of new jobs, higher
incomes
Does advertising
encourage materialism?

Does advertising make people

buy things
they don’t need?

Is advertising just
a reflection of society?
Advertising is the primary source of
revenue for newspapers, magazines,
television and radio

Media’s dependence on advertising for

revenue makes them vulnerable to
control by advertisers

Advertisers may exert control over the

media by biasing editorial content,
limiting coverage of certain issues, or
influencing program content
They must report the news fairly and
accurately to retain public confidence

Advertisers need the media more than

the media need any one advertiser

Media maintain separation between

news and business departments “The
Wall”
Makes consumers aware of
products and services

Provides consumers with

information to use to make
purchase decisions

Encourages consumption,
fosters economic growth
Effects on Consumer Choice
• Differentiation
• Brand Loyalty

Effects on Competition
• Barriers to entry
• Economies of scale

Effects on Product Costs and Prices

• Advertising as an expense that increases
the cost of products
• Increased differentiation
 . Each economic system has an interesting
relationship with the social system (unequal
distribution of wealth) , political system
(international politics-by influencing)and
cultural value.(vice versa)
 a) Economic Harms of Advertising

 More often, though, advertising is used not

simply to inform but to persuade and motivate
— to convince people to act in certain ways:
buy certain products or services, patronize
certain institutions. This is where particular
abuse can occur.
 "brand"-related advertising can raise serious
problems.
 advertising may attempt to move people to act
on the basis of irrational motives ("brand
loyalty," status, fashion, "sex appeal," etc.)
instead of presenting differences in product
quality and price as bases for rational choice.
 It is true that a judicious use of advertising can
stimulate developing countries to improve
their standard of living.
 serious harm can be done them if advertising
and commercial pressure become so
irresponsible
 The result of this is that they waste their
resources and neglect their real needs, and
genuine development falls behind."16
 Advertising also can be, and often is, a tool of
the "phenomenon of consumerism," as Pope
John Paul II delineate it when he said: "It is not
wrong to want to live better; what is wrong is a
style of life which is presumed to be better
when it is directed toward ?having' rather
than ?being', and which wants to have more,
not in order to be more but in order to spend
life in enjoyment as an end in itself."14
From an economic perspective, advertising might lower the
cost of a product by:
A) Creating barriers to entry for less efficient
firms
B) Moving consumers to the consumer
socialization stage of the buying process
C) Making it possible for firms to realize
economies of scale through expansion
of sales volume
D) Allowing firms to advertise at high levels
along with competitors
E) Doing none of the above
 Change consumers’ tastes
Advertising
Equals Market Lowers sensitivity to price
Power
Builds brand loyalty

Results in higher profits

Reduces competition

Leads to higher prices

Leads to fewer choices

 Provides useful information
Advertising
Equals Increases price sensitivity
Information
Increases competition

Pressure for high quality

Pressure for lower prices

Forces inefficient firms out

“It must be said that without advertising
we would have a far different nation, and
one that would be much the poorer-not
merely in material commodities, but in the
life of the spirit.”

Excerpters is from a speech given by Leo Burnett on the American

Association or Advertising Agencies’ 50th anniversary, April 20,1967
 Political advertising can support and assist the
working of the democratic process, but it also
can obstruct it. This happens when, for
example, the costs of advertising limit political
competition to wealthy candidates or groups,
or require that office-seekers compromise their
integrity and independence by over-
dependence on special interests for funds.
 Such obstruction of the democratic process also
happens when, instead of being a vehicle for
honest expositions of candidates' views and
records, political advertising seeks to distort
the views and records of opponents and
unjustly attacks their reputations. It happens
when advertising appeals more to people's
emotions and base instincts — to selfishness,
bias and hostility toward others, to racial and
ethnic prejudice and the like — rather than to a
reasoned sense of justice and the good of all.
 Political advertising can make a contribution to
democracy
 so political advertising can make its
contribution by informing people about the
ideas and policy proposals of parties and
candidates, including new candidates not
previously known to the public
 In the competition to attract ever larger
audiences and deliver them to advertisers,
communicators can find themselves tempted —
in fact pressured, subtly or not so subtly — to
set aside high artistic and moral standards and
lapse into superficiality, tawdriness and moral
squalor.
 Some advertisements are instances of popular
art, with a vivacity (liveliness) and élan
(elegance) all their own.
 advertising contributes to the invidious stereotyping of
particular groups that places them at a disadvantage in
relation to others. This often is true of the way
advertising treats women; and the exploitation of
women, both in and by advertising, is a frequent,
deplorable abuse. "How often are they treated not as
persons with an inviolable dignity but as objects whose
purpose is to satisfy others' appetite for pleasure or for
power? How often is the role of woman as wife and
mother undervalued or even ridiculed? How often is
the role of women in business or professional life
depicted as a masculine caricature, a denial of the
specific gifts of feminine insight, compassion, and
understanding, which so greatly contribute to the ?
civilization of love'?
 Portrayal of women to reflect their
changing role in society

Criticisms of Portrayal of
Gender
women as
stereotyping Advertising Beauty objects
With Regard to
Stereotyping

Ethnic stereotyping/
representation
Groups such as the National Organization for Women (NOW)
are critical of advertising that:
A) Portrays women in traditional sexist roles
B) Contributes to violence against women
C) Is insulting to women
D) Stereotypes women
E) Does any of the above