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Chapter 24 kleppners outline

Chapter 24 kleppners outline - Chapter 24 Advertising...

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Chapter 24 Advertising Criticism: A historical perspective Advertising has changed markedly over the last 130 years. History of advertising criticism: 1. The Era of Exaggerated Claims, 1865-1900. Most ppl accepted advertising as “buyer beware” communication in which virtually any claim for a product was allowed. 2. The Era of Public Awareness, 1900- 1965. It was during this period that both the public and government regulators began to reject the notion of a laissez-faire, unregulated economic system. Pure Food and Drug Act of 1906; proof that Congress recognized public demands of protection from monopolies and prevailing untruthful portrayal of products and services (ads). 3. The Era of Social Responsibility, 1965- present. During last 40 years, advertisers have come to realize that truth alone is not sufficient to meet the demands of ethical advertising. W/out totally rejecting the classical economic concept of the rational buyer, both critics and enlightened marketers agree that some level of consumer protection is needed. The Economic Role of Advertising Currently American advertising accounts for approx. 2.5% of the gross national product 1999 American Association of Advertising Agencies (4As) announced its Value of Advertising intiative, which was intended to educate marketers about the role of advertising in building and protecting the brand franchise. Stated purpose was to show “that diminishing the quantity and/or quality of advertising diminishes the value of the brand, and that the creative employment of media advertising is the only long-term means of achieving and retaining market dominance.” Variety of opinions about usefulness and proper role of advertising. Tend to stem from one of two fundamental views of advertising and economic benefits or liabilities that each fosters: o Advertising as a consumer information tool. One view of advertising is that it is the most efficient and economical means of providing consumers with beneficial information about the availability of products and services. o Advertising as a detriment to market entry. A second, contrary position is that most advertising results in brand switching among major companies and prevents the introduction of new brands, esp. by smaller firms. Economic Arguments in Favor of Advertising 1. Advertising provides consumers with information to make informed decisions about new products, availability of products, price, and product benefits. 2. Advertising supports free media that disseminate news and entertainment. (advertising provides independent press and thousands of media jobs) 3. By promoting product differentiation, advertising encourages continuing product improvements and the intro. Of new/innovative goods and services.
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4. Mass advertising permits companies to achieve economies of scale in production that more than offset the per unit cost of advertising and, combined with competition among opposing brands, results in lower prices.
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Chapter 24 kleppners outline - Chapter 24 Advertising...

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