1. Chapter 2 The Big Picture: The Evolution of IMC
William F. Arens Michael F. Weigold Christian Arens
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Chapter Overview
Explains the principles of free-market economics, the functions and effects of advertising, advertising as an economic tool, and the impact of advertising.

3. Chapter Objectives
Explain the role of competition in free-market economics
Discuss the functions advertising performs in a free market
Understand branding and its benefits
Identify milestones in advertising history
Discuss how the role of advertising has changed
Explore advertising’s impacts on society

4. Coke Polar Bear Commercial Coke Polar Bear Football Commercial Coke Border Commercial Coke India Commercial

5. Q. 1. What are four principles of Free-Market Economics?

6. Assumptions of Free Market Economics
Self - Interest
Complete Information
Many Buyers & Sellers
Absence of Externalities (Tata Nano)

7. Q. 2. What are the various functions and effects of advertising in a free economy?

8. Functions & Effects of Advertising
Identify and differentiate products (branding)
Communicate product features and availability
Induce customers to try products and suggest reuse
Stimulate product distribution
Increase product use
Build value, brand preference, loyalty
Lower overall cost of sales

9. Personal Selling vs. Advertising
Face-to-Face Sales Call = $170.00
To reach 15 million people = $2.55 Billion
30-second TV spot = $500,000.00
Cost of advertising to 15 million people = $30.00

10. Benefits of Strong Brands
Premium pricing
Price war protection
Increases new product success
Leverage for negotiating
Attractive to partners
Aid in dealing with crisis
Recruit top talent
Garner customer loyalty

11. Q. 3. Outline the evolution of advertising.

12. Evolution of Advertising
Preindustrial
Industrializing
Industrial
Postindustrial
pre-1800
1980-present

13. Preindustrial Age of Advertising
During this era, few could read
Then. . .
Chinese invented paper
Gutenberg invented the printing press

14. 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 yourself
Transportation breakthroughs facilitated distribution
Increased need for mass marketing techniques

15. Industrial Age of Advertising
Fresh markets for new, inexpensive brands of luxury and convenience goods
Consumer packaged goods
Catalogs mailed to rural areas
Radio provides new medium
Advertising becomes a profession

16. Golden Age of Advertising
The Product Positioning Era Post WWII
Product differentiation
Age of Television
Market segmentation
Positioning

17. Postindustrial Age of Advertising
Consumers became aware of environmental sensitivity

18. Marketing Warfare
Defensive
Offensive
Flanking
Guerilla

19. Post Industrial Advertising
Demarketing
Cold War ends
Multinational companies expand
Traditional products aged
Affluent baby boomers
Increased competition among agencies
The Internet and Facebook

20. Top Global Marketers [Insert Exhibit 2-4 (p. 49) here
Position: 1.55” vertical, 0.5” horiz.
Size: 8” wide]

21. Top Global Marketers

22. Global/Interactive Age
Advertising becomes a world-wide enterprise

23. Global Interactive Age
TV Remote Control
Satellite and Cable
TiVo
Personal computers
Smart phones
The Web—iTunes, Hulu

24. Q.4. What are the effects of ethics on advertising?

25. Advertising as a Social Force
Improves standard of living
Raises awareness of product availability
Imbues products with personality
Enables us to communicate about ourselves by the products we buy

26. Advertising Ethics and Effects
Ethical advertising can . . .
Foster free press and nonprofits
Foster understanding of social issues

27. Advertising Ethics and Effects
On the other hand, advertising can be dishonest and unethical
Puffery
Advertising to children
Advertising legal but unhealthful products
Encourage conformity
Glorify Conspicuous consumption

28. Effects of Unethical Advertising
Results in laws, regulations, and agencies Pure Food and Drug Act Federal Trade Commission Act Better Business Bureau Association of National Advertisers American Advertising Federation

29. Advertising Ethics and Effects
Public service ads can shape attitudes