2.  Effect on the Value of Products or Services  Effect on Prices  Effect on Consumer Demand & Consumer Choice  Effect on Competition

3. Effects on Consumer Choice Differentiation Brand Loyalty Effects on Consumer Choice Differentiation Brand Loyalty Effects on product costs and prices Advertising as an expense that increases the cost of products Effects on product costs and prices Advertising as an expense that increases the cost of products Effects on Competition Barriers to entry Economies of scale Effects on Competition Barriers to entry Economies of scale Effects on Consumer Choice Differentiation Brand Loyalty Effects on Consumer Choice Differentiation Brand Loyalty Effects on Competition Barriers to entry Effects on Competition Barriers to entry © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

4. Creates Needs and Wants Among Consumers Creates Needs and Wants Among Consumers Promotes Materialism, Insecurity and Greed Promotes Materialism, Insecurity and Greed Is More Propaganda Than Information Is More Propaganda Than Information Provides Information Provides Information Creates Jobs and Helps New Firms Enter a Market Creates Jobs and Helps New Firms Enter a Market Encourages A Higher Standard Of Living Encourages A Higher Standard Of Living Promotes Competition in The Marketplace Promotes Competition in The Marketplace Is More Propaganda Than Information Is More Propaganda Than Information Creates Needs and Wants Among Consumers Creates Needs and Wants Among Consumers Creates Jobs and Helps New Firms Enter a Market Creates Jobs and Helps New Firms Enter a Market Encourages A Higher Standard Of Living Encourages A Higher Standard Of Living Provides Information Provides Information © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Proponents Argue That Advertising Critics Argue That Advertising and Promotion Promotes Competition in The Marketplace Promotes Competition in The Marketplace

5.  Ethics are moral principles & values that govern the actions & decisions of an individual or group  Key areas of debate in advertising regarding ethics is 1. Truth in advertising 2. Advertising to children 3. Advertising controversial products

6. 1. Truth in advertising:  Deception is making false or misleading statements, but puffery is legal 2. Advertising to children:  It promotes materialism in children  Persuasion to children creates child-parent conflicts 3. Advertising controversial products:  Tobacco, alcohol, gambling, lotteries are product categories of greatest concern

7. They Lack the Knowledge and Skills to Critically Evaluate Advertising Claims They Lack the Knowledge and Skills to Critically Evaluate Advertising Claims They Cannot Differentiate Between Programs and Commercials They Cannot Differentiate Between Programs and Commercials Children Must Learn Through the Socialization Process Children Must Learn Through the Socialization Process Children Must Learn Through the Socialization Process Children Must Learn Through the Socialization Process They Cannot Differentiate Between Programs and Commercials They Cannot Differentiate Between Programs and Commercials They Lack the Knowledge and Skills to Critically Evaluate Advertising Claims They Lack the Knowledge and Skills to Critically Evaluate Advertising Claims Need to Acquire Skills Needed To Function in the Marketplace Need to Acquire Skills Needed To Function in the Marketplace Consumer Advocates Argue That Children Are Vulnerable to Advertising Because: While Marketers Argue That:

8. Advertising Is the Primary Source of Revenue for Newspapers, Magazines, and Television and Radio Networks and Stations Advertisers May Exert Control Over The Media by Biasing Editorial Content, Limiting Coverage of Certain Issues or Influencing Program Content The Media’s Dependence on Advertising For Revenue Makes Them Vulnerable To Control by Advertisers Advertising Is the Primary Source of Revenue for Newspapers, Magazines, and Television and Radio Networks and Stations The Media’s Dependence on Advertising For Revenue Makes Them Vulnerable To Control by Advertisers © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

9. Making Consumers Aware of Products and Services Providing Consumers With Information to Use to Make Purchase Decisions Making Consumers Aware of Products and Services © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Encouraging Consumption and Fostering Economic Growth +