1. Chapter Number Two
Overview of Economic, Social & Regulatory aspects of Advertising
Modular:
Afjal Hossain,
Assistant Professor, Department of Marketing, PSTU
Kenneth K. Clow & Donald Baack “Integrated Advertising, Promotions and MCs” 2nd ed.

2. The Role of Advertising in Business
The only primary role is to bring revenue.
The Role of Advertising in Business

3. Advertising Process DAGMAR APPROACH for Advertising: Awareness
Comprehension
Conviction
Action

4. Seven Functions & Effects of Advertising in a Free Economy
To identify products and differentiate them from others.
To communicate information about the product, its features, and its place of sale.
To induce consumers to try new products and to suggest reuse.

5. Seven Functions of Advertising (Continued)
To stimulate the distribution of the product.
To increase product use.
To build value, brand preference, and loyalty.
To lower the overall cost of sales.

6. Controversies About Advertising
Public criticism
Advertising’s effect on prices
Promote or discourage competition
Affect on overall consumer demand
Effects on consumer choice and the overall business cycle
Societal effects
More materialistic?
Forces us to buy things we don’t need?
Reach us subliminally?
Debase our language?

7. The Economic Impact of Advertising
Effect on the Value of Products
Effect on Prices
Effect on Competition
Effect on Consumer Demand

8. The Economic Impact of Advertising (Cont’d)
Effect on Consumer Choice
Effect on the Business Cycle
The Abundance Principle

9. The Social Impact of Advertising
Deception in Advertising
The Subliminal Advertising Myth
The Effect of Advertising on Our Value System
The Proliferation of Advertising
The Use of Stereotypes in Advertising
Offensiveness in Advertising

10. Social Responsibility & Advertising Ethics
Advertisers’ Social Responsibility
Ethics of Advertising

11. Government Restraints on International Advertisers
Some foreign governments are more authoritarian
Some restrict or ban ads for specific products
Many countries prohibit puffery
Many European countries ban coupons, premiums, free tie-in offers, etc.
In Europe, TV ads must be kept completely separate from the programs and be clearly recognizable as such.