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

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Presentation transcript:

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

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

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

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

2-6 Evolution of Advertising PreindustrialIndustrializingIndustrialPostindustrial pre present z

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

2-8 Evolution of Advertising PreindustrialIndustrializingIndustrialPostindustrial pre present

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

2-10 Evolution of Advertising PreindustrialIndustrializingIndustrialPostindustrial pre present

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

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

2-13 Evolution of Advertising PreindustrialIndustrializingIndustrialPostindustrial pre present

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

2-15 Marketing Warfare Defensive Offensive Flanking Guerilla

2-16 Global Interactive Age

2-17 Global Interactive Age: New Media

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

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

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