AdvertisingDon’t park under this ad!

Let’s think…• Why do businesses advertise?

• What are brand name products?– What are the benefits and costs of

brands for consumers?

• How can informative advertising help you make a good decision?

A few more questions…

• Who pays for advertising?

• How does advertising benefit the consumer?

What are these advertisements for?

Taste the rainbow…

Just do it!

Where do we see advertising?

• Magazines • Commercials • Movie Preview • Product

Placement • Billboards • Freebies

• Bumper Stickers• Sporting Fields • Internet• Events • Mail • Stores

THE AVERAGE AMERICAN IS EXPOSED TO 3,000 ADS

EACH DAY!

Brand Advertising

If you remember their name, you’ll buy their products

Slogans, Jingles, logos

Lets take a look at some classics…..

Classic Slogans and Jingles

Brand Advertising

• Benefits– Loyalty– Time

• Costs– Increase price of product

Informative Advertising

• Informs you about a products features and benefits.

• Complex items or technical products

• Appeals to your need for intellectual information

• Infomercials!!!

Informative Advertising

• Cadillac Commercial

• Mac vs. PC

• Mazda Protégé 5

Comparative Advertising

Comparing Products to competitors! • Shows competitors weaknesses and

showcases the best qualities of the brand being advertised

• EX: Tooth Whitening, paste vs. strips

Comparative Advertising

• 4 out of 5 Dentists Agree (old school!)

• Teeth Whitening

Persuasive Advertising

• Appeals to your emotions to buy

• Doesn’t provide much useful information – Owning this product

will make you…• Happier • More successful • More satisfied

• Ignore these, evaluate reality

Persuasive Advertising

• Tide to go

• Cadillac (Kate Walsh)

More on Advertising

• How much was a 30-second spot during last year’s Super Bowl?

• $2.6 Million

• Businesses spend $200 billion a year in advertising.

• In 2005…– Pepsico spent $1.8 BILLION on

advertising!– Cokespent $2.1 BILLION!

Consumer Problems with Ads

• FTC defines Deception as a material “representation, omission, or practice that is likely to mislead a (reasonable) consumer…to the consumer’s detriment

• Fraud is a deliberate deception that, with full knowledge of the perpetrator, misleads or gains an unfair advantage and results in financial loss to the consumer

Deceptive Practice

• Deceptive advertising – deliberately misleads consumers

Puffery– Using claims or descriptions to exaggerate

(“puff up”) a product’s reputation or appeal• “New”• “Unique”• “Extra-strength”• “Super-strength”

– FACTUALLY WRONG – penalties but hard to prosecute vague

but difficult to prove

Sales PricesSales Prices

• Implies a bargain• Lower prices than

customary• Before it can go on

sale a retailer must sell the item regularly at the nonsale price

Competitive Pricing

• Retailer cannot legally say that its prices are lower than a competitor’s without actual proof

• Only imply lower prices

• Do not provide proof

Trading Up• Practice of

convincing customers to buy a higher-priced item than they originally intended– I.e., VCR - $300 and

sales person shows you a $500 VCR

– More features – Do you need these features?

• Nothing illegal about this practice

• Generally the retailer makes a bigger profit on more expensive items

• Be prepared to say NO!!!

Deceptive Practice

Examples• Companies may advertise sales

at 50% off. However, the company first marks the product way up and then marks them down 50% so that they still make a profit.

FTC (Federal Trade Commission)

• Most important federal consumer protection agency

• Responsible for protecting consumers from unfair or deceptive business practices, such as misleading information in advertising or product labels.

Loss Leader

• The item priced below cost to attract you to the store

• Retailer will lose money if you only buy that item, but it gets you to the store in hopes of purchasing other items

Consumers Union

• Consumer Report Magazine– Test Products and rates them on the

basis of quality

Consumer Reports Online

Terry TateOffice Linebacker

Terry Tate