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Advertising is applauded and criticized


When a business advertises, it is safer to buy their product

because they try harder to fulfill promises and satisfy

By using advertising, businesses risk people·s criticism :

2 Attacks if their ads are controversial (offensive, unpleasant)

2 Product does not deliver promises

Controversies Surrounding Advertising
Economic Controversies:
2How does it affect product value?
2Does it affect product prices?
2Does it promote or discourages competition?
2Does it influence consumer choice/decision?
2Does it impact the business cycle?

Social controversies:
2Does it make society more materialistic?
2Does it make us compulsive, buying things we don·t need?
2Does it reach us subliminally in ways we can·t control?
2Does it impact our art and culture?
=uestions on
Responsibility and Control over Advertising:

2What·s the proper role for participants in the marketing process?

2What limits do marketers have in the kinds of products/advertising?

2What is the role of consumers and their responsibilities?

2What·s the role of governments, protection laws and freedom?

2 A country·s level of ad spending is proportional
to its standard of living.

2The economic effect of advertising is like the break

shot in pool. The moment a company starts advertising
it sets off a chain reaction of economic events.
Effect on Product Value

People prefer advertised products over other brands

Why? Ads give brands added value

Psychologist Earnest Ditcher:

Product·s image created by Advertising
is an inherent feature of the product.

How does advertising give value to products?

m Positive image implies good quality

mMakes it desirable by making it better known

(this is why we pay more for advertised products)

mEducates consumer on usage and new usage

(Kleenex make up remover; disposable handkerchief)

mSatisfies self interest

(by associating the product with desirable image)
Functional need v.s. emotional, social, psychological need
m Encouraging competition: Ad. Keeps prices down

mCost of ad. Paid by consumer is small X product total cost

mMass Ad. = mass distribution:

Enables mass production of products
bringing cost/unit lower

mPrice as ad. Feature: keeps prices lower

(exception: when promoting better quality)

Government Deregulation: opens market competition

m ãntense competition:
Reduces No. of businesses in an industry

mAd budget is important for industries that

heavily depend on ad. (auto industry)

m Ad budget is usually small compared to product cost

Governed by complex set of factors: economic & social

m technological advances
m consumer educational level
mPopulation increase
mLifestyle changes

mEx., demand for CD, cell phones due to favorable market conditions
demand for DVD v.s. Blueray
á   : Launching new products
Ad. new products, giving complete information,
ãn growing markets ad. competes for shares in growth

Selective Demand: Advertising specific info. only

(ex. Ad. price only when the only info needed is price)
m Freedom to advertise promotes more sellers
Gives consumers more Choices

mCreates new products

mãmproves old products

m helps sustain employment & income

mHelps maintain flow of consumer demand

mCreates consumer preference for certain products

m Business cycle up --- ad. Budget up, contributes

m Business cycle down ---ad. Acts as a stabilizing force
mCompanies that continue to ad. When business
cycle dips protect and build market shares



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