Advertising Dont park under this ad!

Lets 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, youll 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 Doesnt 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 years 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 consumers 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 products reputation or appeal New Unique Extra-strength Super-strength –FACTUALLY WRONG – penalties but hard to prosecute vague but difficult to prove

Sales 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 competitors without actual proof Only imply lower prices Do not provide proof

Examples of Misleading Advertising

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 Tate Office Linebacker Terry Tate