Advertising

Question 1

introduction to advertising

Answer 1

traditional advertising is 1-way communication. Send a message to make an impression, more messages more likely success. Constraints force 1. efficiency and 2. effectiveness

Question 2

Reach v Frequency

Answer 2

the greater the reach, the less the message need be repeated. trade-off between frequency and reach based upon:
goals of advertising
characteristics of message
constraints in environment

Question 3

Reach definition

Answer 3

the % of population that is exposed to the ad at least once. increasing reach compromises ability to frequent. should use reach when simple, reminding objective, or friendly environment

Question 4

Frequency definition

Answer 4

the average number of times an individual is exposed to an ad. high frequency compromises reach. should use frequency when complex, persuasive objective, or noisy environment.

Question 5

Noise in the advertising environment

Answer 5

of ads
low consumer involvement
confusion and market-leader attributions

Question 6

Tactics used to address the Noise

Answer 6

Large budgets
Creative execution
Schedule and placement
clear and concise positioning/message

Question 7

Price promotion

Answer 7

advertising not very effective
non-durable goods have low advertising elasticity
difficult to measure exposures, noise is great
transfer money from adv. budgets to promotional

Question 8

Price promotion as short term benefit

Answer 8

while satisfying in the short term, compromise ability to label products as different. prompt competition to also lower prices, less profit, no change in market share.

Question 9

The online environment

Answer 9

digital ads rival traditional by:
ad effectiveness/ ad relevance
will it evaporate traditional advertising: depends on 
A) nature of product
B) consumer's history with product
C) validity of recommendations

Question 10

What does advertising achieve?

Answer 10

-tension between firm and advertising agency based on results. Goals are difficult to achieve. Difficult to measure.

Question 11

Stages toward purchase

Answer 11

1. awareness
2. knowledge
3. liking
4. preference
5. purchase
6. brand switching/repeat purchase

Question 12

What stages are the advertisers in control of?

Answer 12

1 and 2

Question 13

What stages do firms expect in goals?

Answer 13

1-5

Question 14

4 scenarios of advertising

Answer 14

1. flat line of all stages, no effect at all
2. awareness and knowledge increase, but nothing else. not necessarily advertisers fault, but firm might think so
3. awareness, knowledge, preference increase, but they still don’t buy or repeat. price? switching costs?
4. awareness, knowledge, preference, and purchase, but don’t return again. Product quality low or expectations too high.

Question 15

Economic- informational view

Answer 15

1. informs consumers, but does not alter views
2. this allows easier perception of substitutes and increases price sensitivity
3. increases communication and decreases barriers to entry.
4. the higher competition leads to lower prices

Question 16

Economic- Market power view

Answer 16

1. advertising influences taste and preference/ differentiates products in consumer minds
2. consumers become more brand loyal and less sensitive to price.
3. loyalty increases entry barriers.
4. less competition leads to higher prices

Question 17

Behavioral- consumers are good learners

Answer 17

• rational consumers- ability to retain full information

- advertising doesn’t influence repeat purchase in this sense

Question 18

types of attributes affecting consumer learning

Answer 18

search goods- buy off price
experience goods - buy off taste
credence goods- consumers can measure value or utility by x product- no favorable brand

Question 19

Behavioral- consumers as poor learners

Answer 19

consistent with “market power”

-if consumers are ineffective learners, advertising plays an important role in purchase decisions.

Question 20

4 hinderers of learning

Answer 20

1. insufficient exposure to evidence (lack of motivation, overestimate knowledge, overestimate reliability of single of few experiences)
2. biased encoding of evidence (interpret information in way consistent with prior beliefs, especially ambiguous information)
3. inappropriate use of evidence (misinterpretation of evidence)
4. use of “signals” and peripheral cues (consumers taking shortcuts when making judgements)

Question 21

Ethics

Answer 21

using vulnerability of certain populations to profit advantage (children, elderly)
creating needs that weren’t necessary, may not be unethical just misconstrued consumers