marketing final - AEM 2400 Fall 2009 Marketing Prof....

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AEM 2400 Fall 2009 Marketing Prof. McLaughlin 1. Advertising has faced a great deal of criticism in recent years. Discuss 6 such criticisms. Also, discuss the defenses offered by marketers about the validity and usefulness of advertising. Criticisms 1. Results in market concentration - There is a strong correlation between advertising sales ratios and industry concentration, so industries with higher concentration tend to spend more on advertising. Market concentration is not good for consumer welfare because it limits competition and this allows firms to raise prices. 2. Promotes bourgeois mentalities - I want everything in the ad and I want to go spend all my money 3. Destroys consumer sovereignty - Consumer sovereignty is the concept that consumers themselves know what is best for themselves./ Advertising destroys this because we are bombarded with messages and it influences us to the point where we become irrational and buy things as a result of advertisement and not because we actually need it. 4. Inhibits price competition 5 . Is defensive, self-canceling and a waste - The only reason Coca-Cola spends so much money on advertising is that Pepsi would take over if they don’t. 6. Gives nearly free media- Advertisers pay millions for TV commercials and now the Super Bowl is free. If p&G pays $3 million for a Super Bowl commercial, who pays for it? consumers because they are what drive profit for the company. 7. Creates demand for “false” needs, perhaps harmful ?- Smoking and alcohol ads, we don’t need this!/ Everyone defines false needs differently, are soft drinks and unhealthy foods false needs?/ These products may or may not be socially acceptable. 8. Is deceitful, not truthful and lacking integrity?- Video in class about actor not wanted to act out the commercial for butter because it is so gross. 9. Ads are often simply inappropriate and offensive Advertising claims 1. Advertising functions more as a mirror than a mind bender, responds to culture more than shapes it- Just because we hear or see a commercial doesn’t mean we are going to run out and buy it 2. Guarantee of quality- Advertising gets you to try a product, but if the product doesn’t perform like you want it to the consumer wont keep buying it./ Advertising a bad product is the quickest way to kill a product. 3. Only hypothetical, circumstantial evidence- Correlation does not cause causation 4. Who is qualified to judge others needs?- Consumer himself knows what is best. 5. Permits achieving economies of scale - Advertising increases emand and higher demand means more produced means better economies of scale which means lower cost per unit and lower overall costs. 6. Stimulates output and effort in free market. - This is capitalism, seeing a BMW will make me work hard so one day I can afford a BMW 2. Some contend that all businesses should be marketing-oriented and, indeed, that all marketing is about satisfying consumers. a) How exactly do consumers benefit from marketing?
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marketing final - AEM 2400 Fall 2009 Marketing Prof....

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