2-2 Chapter Overview Explains the principles of free-market economics, the functions and effects of advertising, advertising as an economic tool, and the impact of advertising.
2-3 Chapter Objectives Explain the role of competition in free- market economics Discuss the functions advertising performs in a free market Identify milestones in advertising history Discuss how the role of advertising has changed Explore advertising’s impacts on society Understand branding and its benefits
2-4 Coke Polar Bear Commercial Coke Polar Bear Football Commercial Coke Border Commercial Coke India Commercial
2-5 Q. 1. What are four principles of Free- Market Economics?
2-6 Assumptions of Free Market Economics Self - Interest Absence of Externalities (Tata Nano) Complete Information Many Buyers & Sellers
2-7 Q. 2. What are the various functions and effects of advertising in a free economy?
2-8 Functions & Effects of Advertising Identify and differentiate products (branding) Communicate product features and availability Induce customers to try products and suggest reuse Stimulate product distribution Increase product use Build value, brand preference, loyalty Lower overall cost of sales
2-9 Personal Selling vs. Advertising Face-to-Face Sales Call = $170.00 To reach 15 million people = $2.55 Billion 30-second TV spot = $500,000.00 Cost of advertising to 15 million people = $30.00
2-10 Benefits of Strong Brands Strong brands Premium pricing Price war protection Increases new product success Leverage for negotiating Attractive to partners Aid in dealing with crisis Recruit top talent Garner customer loyalty
2-11 Q. 3. Outline the evolution of advertising.
2-12 Evolution of Advertising PreindustrialIndustrializingIndustrialPostindustrial pre-18001800-19001900-19801980-present
2-13 Preindustrial Age of Advertising During this era, few could read Then... Chinese invented paper Gutenberg invented the printing press
2-14 Industrializing Age of Advertising Producers needed mass consumption to match mass production For the first time, it cost less to buy a product than to make it yourself Transportation breakthroughs facilitated distribution Increased need for mass marketing techniques
2-15 Industrial Age of Advertising Fresh markets for new, inexpensive brands of luxury and convenience goods Consumer packaged goods Catalogs mailed to rural areas Radio provides new medium Advertising becomes a profession
2-16 Golden Age of Advertising Product differentiation Market segmentation Positioning The Product Positioning Era Post WWII - 1970
2-17 Postindustrial Age of Advertising Consumers became aware of environmental sensitivity
2-19 Post Industrial Advertising Demarketing Cold War ends Multinational companies expand Traditional products aged Affluent baby boomers Increased competition among agencies The Internet and Facebook
2-20 Top Global Marketers [Insert Exhibit 2-4 (p. 49) here Position: 1.55” vertical, 0.5” horiz. Size: 8” wide]
2-21 Top Global Marketers
2-22 Global/Interactive Age Advertising becomes a world-wide enterprise
2-23 Global Interactive Age TV Remote Control Satellite and Cable TiVo Personal computers Smart phones The Web—iTunes, Hulu
2-24 Q.4. What are the effects of ethics on advertising?
2-25 Advertising as a Social Force Improves standard of living Raises awareness of product availability Imbues products with personality Enables us to communicate about ourselves by the products we buy
2-26 Advertising Ethics and Effects Ethical advertising can... Foster free press and nonprofits Foster understanding of social issues
2-27 Advertising Ethics and Effects On the other hand, advertising can be dishonest and unethical Puffery Advertising to children Advertising legal but unhealthful products Encourage conformity Glorify Conspicuous consumption
2-28 Effects of Unethical Advertising Results in laws, regulations, and agencies Pure Food and Drug Act Federal Trade Commission Act Better Business Bureau Association of National Advertisers American Advertising Federation
2-29 Advertising Ethics and Effects Public service ads can shape attitudes