1. McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 2 The Big Picture: The Evolution of Advertising

2. 2-2 Chapter Overview Explains the principles of free-market economics, and the functions and effects of advertising

3. 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 past, present, and future impacts on society

4. 2-4 Assumptions of Free Market Economics Self - Interest Absence of Externalities Complete Information Many Buyers & Sellers

5. 2-5 Functions & Effects of Advertising o Identify and differentiate products (branding) o Communicate product features and availability o Induce customers to try products and suggest reuse o Stimulate product distribution o Build value, brand preference, loyalty o Lower overall cost of sales

6. 2-6 Evolution of Advertising PreindustrialIndustrializingIndustrialPostindustrial pre-18001800-19001900-19801980-present z

7. 2-7 Preindustrial Age of Advertising During this era, few could read

8. 2-8 Evolution of Advertising PreindustrialIndustrializingIndustrialPostindustrial pre-18001800-19001900-19801980-present

9. 2-9 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 Transportation breakthroughs facilitated distribution Increased need for mass marketing techniques

10. 2-10 Evolution of Advertising PreindustrialIndustrializingIndustrialPostindustrial pre-18001800-19001900-19801980-present

11. 2-11 Industrial Age of Advertising Fresh markets for new, inexpensive brands of luxury and convenience goods

12. 2-12 Industrial Age of Advertising Product differentiation Market segmentation Positioning The Product Positioning Era

13. 2-13 Evolution of Advertising PreindustrialIndustrializingIndustrialPostindustrial pre-18001800-19001900-19801980-present

14. 2-14 Postindustrial Age of Advertising Consumers became aware of environmental sensitivity

15. 2-15 Marketing Warfare Defensive Offensive Flanking Guerilla

16. 2-16 Global Interactive Age

17. 2-17 Global Interactive Age: New Media

18. 2-18 Advertising Ethics and Effects Ethical advertising can... Improve standards of living Inform of availability of products Imbue products with personality Help us make personal statements Foster free press and nonprofits

19. 2-19 Advertising Ethics and Effects On the other hand, advertising can: Be dangerous if misleading Promote unhealthy products Encourage conformity Glorify conspicuous consumption Target vulnerable markets

20. 2-20 Advertising Ethics and Effects Public service ads can shape attitudes