ADVERTISING Don’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?

Magazines Commercials Movie Preview Product Placement Billboards Freebies Bumper Stickers Sporting Fields Internet Events Mail Stores WHERE DO WE SEE ADVERTISING? THE AVERAGE AMERICAN IS EXPOSED TO 3,000 ADS EACH DAY!

WHO DOES ADVERTISING TARGET? Age Race Gender Profession Others:

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 Classic Slogans and Jingles  Now let’s test you slogan knowledge!

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 Charmin Toilet Paper

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!  Coke spent $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 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

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.

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

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.

FINAL THOUGHTS Each advertisement should…  Target a specific group  This is your TARGET MARKET  Fit into ONE type of ad  Informative, comparison, persuasive

MORE ADVERTISEMENTS!