IMPACT OF ADVERTISING

ON CONSUMER

IMPACT OF ADVERTISING

ON CONSUMER

Advertising and Promotion Viewpoints

Creates consumer needs, wants Creates consumer needs, wants

Promotes materialism, insecurity, and greed

Promotes materialism, insecurity, and greed

More propaganda than informationMore propaganda than information

Provides informationProvides information

Creates jobs Creates jobs

Encourages higher standard of livingEncourages higher standard of living

Promotes competition Promotes competition Proponent argumentsProponent arguments

Critic arguments

Critic arguments

Helps new firms enter a marketHelps new firms enter a market

Ethics in Advertising and Promotion

Not all issues can be regulated

Not all issues can be regulated

A marketing or promotion action may be legal but

not ethical

A marketing or promotion action may be legal but

not ethical

Marketers must decide the

appropriateness of their actions

Marketers must decide the

appropriateness of their actions

Ethics: Moral principles and values that govern the actions and decisions of an individual or group.

Ethics: Moral principles and values that govern the actions and decisions of an individual or group.

Advertising and Children

Children's TV Watching Behavior

Children's TV Watching Behavior

Children ages 2-11 watch an average of 22 hours of TV per week and see 30,000 commercials per year

Children ages 2-11 watch an average of 22 hours of TV per week and see 30,000 commercials per year

80% of all advertising targeted to children falls in fourproduct categories:Toys, cereal, candy & fast food restaurants

80% of all advertising targeted to children falls in fourproduct categories:Toys, cereal, candy & fast food restaurants

Perspectives on Ads for Children

Advocates Argue That Children:Advocates Argue That Children:

Marketers Argue Children:Marketers Argue Children:

Lack the knowledge and skills to evaluate

advertising claims

Lack the knowledge and skills to evaluate

advertising claims

Cannot differentiatebetween programs and

commercials

Cannot differentiatebetween programs and

commercials

Must learnthrough socialization

Must learnthrough socialization

Must acquire skills needed to function in

the marketplace

Must acquire skills needed to function in

the marketplace

Social and Cultural Consequences

Does advertising encourage materialism?

Does advertising encourage materialism?

Does advertising make people buy thingsthey don’t need?

Does advertising make people buy thingsthey don’t need?

Is advertising justa reflection of society?

Is advertising justa reflection of society?

..How is he ?....

Mr Sharuk khanMr Sharuk khan

Promoting his movie… on TV serials

Promoting his movie… on TV serials

After all this he earns above RS200 cr

After all this he earns above RS200 cr

BRAND’S……!!!!

Who all run Brand’s…..

Do Advertisers Control the Media?

Advertising is the primary source of revenue for

newspapers, magazines, television and radio

Advertising is the primary source of revenue for

newspapers, magazines, television and radio

Advertisers may exert control over the media by biasing editorial content, limiting

coverage of certain issues, or influencing program content

Advertisers may exert control over the media by biasing editorial content, limiting

coverage of certain issues, or influencing program content

Media’s dependence on advertising for revenue makes them vulnerable to control by

advertisers

Media’s dependence on advertising for revenue makes them vulnerable to control by

advertisers

They must report the news fairly and accurately to retain

public confidence

They must report the news fairly and accurately to retain

public confidence

Advertisers need the media more than the media need

any one advertiser

Advertisers need the media more than the media need

any one advertiser

Media maintain separation between news and business

departments “The Wall”

Media maintain separation between news and business

departments “The Wall”

ARE SOME ADDS BENIFICIAL……

Smoking kills

CAN YOU!!!!

SO HARD WORK THEY DO!!!

Role of Advertising in the Economy

Makes consumers aware of products and servicesMakes consumers aware of products and services

Provides consumers with information to use to

make purchase decisions

Provides consumers with information to use to

make purchase decisions

Encourages consumption, fosters economic growth

Encourages consumption, fosters economic growth

Economic Impact of Advertising

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• Increased differentiation

Effects on Product Costs and Prices• Advertising as an expense that

increases the cost of products• Increased differentiation

Effects on Competition• Barriers to entry • Economies of scale

Effects on Competition• Barriers to entry • Economies of scale

Summarizing Economic Effects

Change consumers’ tastesChange consumers’ tastes

Reduces competitionReduces competition

Lowers sensitivity to priceLowers sensitivity to price

Builds brand loyaltyBuilds brand loyalty

Advertising Equals Market Power

Advertising Equals Market Power

Leads to higher pricesLeads to higher prices

Leads to fewer choicesLeads to fewer choices

Results in higher profitsResults in higher profits

Summarizing Economic Effects

Provides useful informationProvides useful information

Pressure for lower pricesPressure for lower prices

Increases price sensitivityIncreases price sensitivity

Increases competitionIncreases competition

Advertising Equals

Information

Advertising Equals

Information

Forces inefficient firms outForces inefficient firms out

Pressure for high qualityPressure for high quality