The economic, social and regulatory aspects of advertising- PDF

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Class notes on the economic, cultural, social and regulatory aspects of advertising, as well as the most common controversies that arise around this, its economic impact, misleading advertising, advertising offenses and social responsibility. ...

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THE ECONOMIC, SOCIAL AND REGULATORY ASPECTS OF ADVERTISING The many controversies of advertising Advertising is one of the most visible activities of business. By inviting people To test their products, companies risk criticism and public attacks If your advertising displeases or offends the audience, or if your products are not up to par Of the promise announced. Advertising advocates say that it is therefore More isTo buy products advertised because, when the name and reputation of the A company are on the line, the company strives to keep its promises (especially When lists the benefits of the product. Advertising is applauded and criticized not only for its function of selling products, but Also because of their influence on the economy and society. For years, critics have denigrated To publicity for a wide range of sins, some real, some imagined. John O'Toole, the president of Foote, Cone & Belding and President of the Association American advertising agencies said that many critics attack advertising Because it's nothing else. It is not journalism, neither education nor entertainment, although He often performs the tasks of the three. To go back to the original definition of Albert Lasker, advertising is the art of selling in printed form (or through current speech, in The space and time paid by the mass media). As a means of Communication, advertising shares certain traits with journalism, education and Entertainment, but should not be judged by those standards. Sponsors announce Because they expect this to help them sell some product, service or idea. No However The articulated defense of O'Toole, many controversies still revolve in Around the field of advertising. Some of them focus on the ECO functionnOMICs The publicity. For example, how does advertising affect the value of products? Cause Higher or lower prices? Does it stimulate competition or discourage it? How does the Advertising to the general demand of consumers? What is the effect on the choice of Consumer and in the general business cycle? Other controversies focus on the social effects of advertising. For example, does the Advertising makes us more materialistic? You're forcing us to buy things we don't need? ¿It comes to us subliminally in ways that we cannot control? How does it affect art And the culture of our society? Does advertising degrade our language? From these economic and social controversies, new questions arise regarding To the responsibility and control of advertising. What is the appropriate role of the participants In the marketing process? How much freedom should marketers have In the kinds of products they promote and how do they advertise them? Finally, What is the proper role of the government? What laws should we have to protect Consumers? And what laws go too far and violate the freedom of expression of Marketer? These are important questions and there are no simple answers. But the discussion is sAvalanche.

The underlying principle of the free market economy: that A society is best served by empowering people to take their respective Decisions and act as free agents within a system characterized by four Fundamental assumptions: Personal interest, many buyers and vendors, information Complete and absence of externalities (social costs). This fundamentally utilitarian framework, derived from the society's goal of promoting Behaviors that encourage the greater good for most people, offers a system of economic activity the free enterprise that has achieved that goal Better than any other economic system in history. For this reason, the societies of Everybody is increasingly adopting a free enterprise economy. By using this framework for our analysis of advertising controversies, we have A basis for understanding how advertising can contribute, or detract, to the basic goal of free Enterprise: "The greatest good for most people." The economic impact of advertising. Counted advertising almost 1.1% of the U.S. gross domestic product (GDP). In Relationship with the total US economy, this percentage is small, but it is more than in most countries. Amount to a level of spending of 567.79 dollars for each Person in the country, the largest per capita spending in the world. As Marcel pointed out Bluestein Blanchet, the father of French publicity Modern It is no coincidence that the level of Investment in advertising in a country is directly proportional to its standard of living. The economic effect of advertising is like the opening shot in the billiards (or pool). In The moment a company begins to advertise, it initiates a chain reaction of Economic events. The extension of the chain reaction, Although difficult to predict, it relates to the force of the shot and the economic environment in the What happened. Consider the economic questions we raised earlier. Effects on the value of the products. Why do most people prefer Coca-Cola to some other queue? Why do some People prefer khakis and Fitch persimmon pants about some other brand Not advertised? Are advertised products better from The functional point of view? No Necessarily. But, in the consumer's mind, advertising Him has given these brands Value added. In the mid-sixties, the famous psychologist Ernest Ditcher claimed that the image of an article, created in part by advertising and promotion, is a characteristic Inherent in the product itself. Subsequent studies showed What Although an ad may not address the quality of a good directly, the positive image transmitted by Advertising can involve quality. It is more, by only making the product more known, the Advertising can make it more desirable for the consumer. In this way, advertising Adds value to the brand.

For this reason, people pay more for Buffering That by an unannounced mark exhibited next to him, even though all the damped aspirin is, By law, the same thing from a functional point of view. Advertising also adds value to a brand by educating customers about uses New for a product. At first, Kleenex was advertised as a makeup remover and Later as a disposable handkerchief. AT&T first promoted the phone as a necessity And then as a convenience. One advantage of the free market system is that consumers can choose the Values they want in the products they buy. For example, if the low price is important, You can buy a cheap little car. If position and luxury are important, You can buy a fancy sedan or a sports car. Many of our Desires are emotional, social or psychological rather than functional. A way that We communicate who we are is through the goods we buy and Show. By associating the product with a desirable image, advertising offers People the opportunity to meet those psychic or symbolic desires and needs. In terms of our economic framework, by adding value to products, advertising It favors the personal interest of both the consumer and The Advertiser. Also contributes to the number of vendors. This increases competition, which also serves as a for the personal interest of the consumer. Effect on prices If advertising adds value to the products, it can be deduced that it also adds cost, right? And if companies stopped all that expensive publicity, the products would cost Less, right? Wrong. Some advertised products cost more than non-advertised items, but It is also true the opposite. Both the Federal Trade Commission and the Supreme Court have failed that, by encouraging competition, advertising has the effect of keeping Low prices. This again serves the personal interest of the consumer. And for that reason, Professionals are now allowed to advertise as lawyers and physicians. Radical expressions about the positive or negative effect of advertising are likely to on the prices are too simplistic. However, we can point out some Important points: -As one of the many costs of doing business, indeed, the consumer who Buy the product pay the publicity. However, in most of the categories of goods, the amount spent on advertising is usually very small Compared to the total cost of the item. -Advertising is an element of the mass distribution system that allows Many manufacturers perform a large production, which in turn decreases the cost Unitary manufacturing. So these savings can happen to consumers With lower prices. In this indirect way, advertising helps to reduce the prices. -Throughout history, in industries subject to government price regulation (Agriculture, utilities) advertising has had no effect on its rates. In the Eighties,

however, the government deregulated many of these industries in a Effort to restore the pressures of the free market in prices. In these cases, Advertising has affected the price, usually in descending form, but not Always. -At retail price is a prominent element in many advertisements, so the Advertising tends to keep prices low. On the other hand, national manufacturers They use advertising to emphasize features that make their brands better; In these cases, advertising tends to hold higher prices for its brands. Effect on competition Some observers believe that advertising restricts competition due Small companies, or newcomers to the industry, cannot compete with the flamboyant advertising budgets of the big companies. It is true that strong competition tends to reduce the number of businesses in a However, some of the companies eliminated by the competition can be Those that served the clients with less effectiveness. In other cases, competition is reduced due to mergers and acquisitions in favor of large companies working in their own interest. High costs can inhibit the entry of new competitors into industries that They spend a lot on publicity. In some markets it is likely that the original brands Benefit greatly from this barrier. However, the investments needed to Plants, machinery and labor are of a Even greater significance. Often, These and not advertising are the real barriers to entry. Advertising large companies often only has a limited effect on Small businesses because, rarely, a single advertiser is big enough To dominate the whole country. Regional oil companies, for example, compete in Very successful way with national companies at the local level. In fact, freedom of Advertising encourages more vendors to enter the market. And we've all seen it compete, Very effectively, unannounced food brands with advertised brands Nationwide on the same grocery shelves. Effect on consumer demand The issue of the effect of advertising on total consumer demand is complex in End. Many studies show that promotional activity affects aggregate consumption, But they disagree about the extension. Many social and economic forces, As technological advances, the educational level of the people, increases in the population and income, and revolutionary lifestyle changes, are more meaningful. For example Demand for MP3 players, cell phones and broadband Internet service Expanded at a huge pace, thanks in part to the Advertising But more to conditions Favorable market. Also, advertising has not invested declination in the Sales of items such as hats, fur coats and hand-writing machines. LTo advertising can help to take off new products By giving more information to more people and thus

stimulating demand Primary (demand for the whole product class). In low markets, when the only Information that people want is price information, advertising can influence in the selective demand (demand of a mark). But the only effect it will have in the primary demand is to decrease the rate of descent. In growing markets, Advertisers usually compete for quotas of that growth. In mature markets, Static or declining, competing for quotas among themselves: sales of Conquest. Effect on consumer choice For manufacturers, the best way to beat the competition is to make your product different. For example, see the long list of models, sizes, colors and characteristics of the Cars designed to attract different buyers. Also, the shelves of Supermarkets can contain more than 100 different brands of cereals for breakfast, Something for everyone. The freedom to advertise encourages businesses to generate new brands and improve the old ones. When a brand reaches market dominance, the smaller ones can Disappear for a while. But now a better product is presented, and it is Advertised skillfully, the dominant brand loses to a top and new article. Again, the freedom to announce promotes the existence of more vendors, and this will It give consumers broader options. Effect on Business cycle The relationship between advertising and gross domestic product has been debated for a long time. John Kenneth Galbraith, a constant critic of advertising, admits that, by helping to keep Consumer demand flow (encouraging more buyers), advertising It helps to sustain employment and income. But he argues that, despite the reduction in Dollar value, America's trade deficit persists because advertising and marketing activities create consumer preference for certain products Foreign. From the historical point of view, when business cycles decline, companies They reduce their spending on advertising. This can help short-term earnings, Although several studies show that businesses that continue to invest in advertising During a recession they are more able to protect, and sometimes form, market shares. However, no analysis has shown What If everyone continues to advertise, the cycle Recessive will be reversed. We conclude that when business cycles go up, advertising contributes to the increase; When they come down, advertising can act as a stabilizing force by encouraging more consumers to buy. The principle of abundance: the economic impact of advertising in perspective. For individual businesses like Abercrombie & Fitch, or the auto dealer Local and convenience store on the corner, advertising envision more than it costs. If it did not bear fruit, no one would use it, and the various news and entertainment media that They depend on advertising for financial support would come out of business.

Advertising costs less to the consumer than most people think. The cost of a Bottle of Coke includes about a penny of a dollar. Likewise, the announcement of 20 000 Dollars in a new car usually includes a manufacturer's advertising cost Less than 400, 000. For the economy as a whole, the importance of advertising can be demonstrated Better by the principle of abundance. It states that in an economy that produces More goods and services than can be consumed, advertising serves two purposes Important: keeps consumers informed of their options (full information) and allows companies to compete more effectively for consumer dollars (personal interest). In North America alone, the American economies And Canadians produce a huge selection of products. Most of the supermarkets They contain more than 30 000 different items. Every car manufacturer Sells dozens of models. And many vendors compete for consumer dollars. Generally, this competition generates more and better products at similar prices or minors. Advertising stimulates competition (many buyers and vendors). In QAíses Where consumers have higher income to spend after that they meet their Physical needs, advertising also stimulates innovation and new products. However, no amount of publicity can achieve long-term acceptance of products that do not comply with consumer approval. Despite the costs Huge in advertising, less than a dozen of the 50 best-known cars that Were developed in the twentieth century are still sold today. Advertising stimulates a healthy economy. It also helps to create consumers with Healthy finances that are more informed, better educated, and more demanding. As a result, consumers now demand that manufacturers be responsible for their publicity. This has led to an unprecedented level of social criticism and regulation Legal, topics of our following sections. The social impact of advertising. Because it is so visible, advertising is often criticized so much so it's like So it's not. Many of the criticisms focus on the advertising style, as they point out As deceitful or manipulative. Collectively we could refer to these situations As short-term manipulative arguments. Other trials focus on the impact Social or environmental advertising. These are long-term macro arguments. In our analysis of the economic impact of advertising, we focus on everything In the first two principles of the free market economy: personal interest and many Buyers and sellers. Generally, the social aspect of advertising implies the Last two principles: complete information and absence of externalities. In fact, the debates Social issues can be seen as cases where advertising tends to violate One or more of these fundamental economic principles. We can examine many subjects From these two perspectives. Some of the most important are deception and manipulation in advertising, the effect of advertising on our system of values, disorder Commercial, stereotypes and offenses. Let's look at some of these common criticisms of advertising, discredit some misconceptions and examine the problems that exist.

Deception in Advertising One of the most constant and common arguments about advertising is that it often It's misleading. The teacher Ivan Preston points out that the essence of a market lies In the will of buyers and sellers to carry out commercial transactions. Anything that detracts merit from the satisfaction of such operations results in a loss of activity that at the end of the day injures both parties. If a product is not Height of their advertisements, generates dissatisfaction, and in the long run this is so detrimental to The Advertiser and the buyer. For advertising to be effective, consumers must have confidence in it. Like this That any kind of deceit not only detracts from the principle of complete information of free enterprise, but also risks being counterproductive. Even the Puffery Meaningless (though legal) could be taken to the letter and therefore become misleading. The Puffery Refers to exaggerated subjective claims that cannot be demonstrated That are true or false, like "The best", "premier" or "The only way to fly." Under the current laws of advertising, the only statements of explicit products or implied Considered misleading are those that are objectively false or that transmit False impression and therefore have the potential to deceive or disorient to reasonable people. But it excludes the Puffery Of these requirements because the regulators They argue that reasonable people do not believe in it in any way. Preston Indicates that in view of the advertisers ' regular use of the Puffery and events that have nothing to do with products to improve the image of these, they must think that Consumers believe it. Non-product events do not correspond To the brand, but to the consumer or the social context in which the mark is used. An example It's "Pepsi. The choice of a new generation. " The fact is that advertising, by its nature, is not complete information. Is Biased in favor of the Advertiser and the brand. People expect advertisers to be Proud of their products and may not care if they brag about them a bit. But when Advertisers cross the line between just saying and creating false expectations, is when the People begin to object. One problem is the difficulty of seeing the line, that different People can draw differently. No doubt, Papa John Pizza thought that only He was bragging when he announced "best ingredients. Best pizza. " However, Pizza Hut He saw it in a different way and sued Pope John by misleading publicity. A judge Of the United States District agreed and conceded to Pizza Hut about half Million dollars in damage. So the judge ordered Pope John To stop using your Slogan "Best Ingredients". This decision was then revoked in the appeal, but the Case still shows that there are limits on what an advertiser can safely consider, Like a flaunt. Preston says, "only the bragging that can be measured loses their invisible shields. If Pope John He says he has better pasta, he can attack him. But if Potato John He says it's better overall, okay. The bigger the lie, the greater It will be protection. Isn't it amazing? " For more about this story and the Puffery.

Preston believes that these problems can be avoided if marketers just They improve the type of info...