An introduction to advertising and the theory of the firm

There are people, who directly believe what is transmitted without any critical personal stance, retaining a more positive attitude towards the advertised product, with significant effects on sales in subsequent periods.

In all this, advertising reduces the perceived risk for the buyer and for the seller. In so doing, massive advertising of already known firms is an entry barrier for new firms, even if they offer superior quality goods, which are simply disregarded by indifferent consumer.

Some would say that the best advertising for a restaurant is the queue in front of it waiting to sit, not a billboard boasting "high quality" dishes.

Banks could be reluctant to finance costly advertising campaigns for new products of uncertain success thus indeed reducing their chances of success. Impact on behaviours and outcomes Micro level By providing a mix of information and persuasion, advertising impacts almost all phases of the decision making process of the consumer.

The connection is offered by a "trustworthy" brand, whose heavily advertised logo is what reduces the complexity of multi-criteria choice to a simple gesture.

which of the following is a possible outcome of advertising

More significantly, advertising connects a good to a need, suggesting that by consuming the good the need will be fulfilled. The term above the line ATL is used for advertising involving mass media; more targeted forms of advertising and promotion are referred to as below the line BTL.

Sometimes, it make easier to reach the good, e.

Complementary advertising

This, in turn, is conducive to trust by people who cannot judge autonomously "They wouldn't spend so much for advertising, if they weren't sure of having a good product". In so doing, retailers increase their margins and control over product features. In , the main advertising media in America were newspapers, magazines, signs on streetcars , and outdoor posters. Visual advertising will tend to provoke "recognition" of the product when displayed in the shop, whereas word-based advertising will reinforce remembering the name of the brand, so that the consumer will explicitly request it to the seller. In terms of the media business TV, press, websites as Facebook, etc. Advertising - especially of new products - can have unexpected consequences and many campaigns fail their targets. For restyled and restaged existing products, advertising can lead to a new look at them, offering the opportunity to a change in opinion. Such signs are common on storefronts. In the United States, the success of this advertising format eventually led to the growth of mail-order advertising. Banks could be reluctant to finance costly advertising campaigns for new products of uncertain success thus indeed reducing their chances of success. In June , French newspaper La Presse was the first to include paid advertising in its pages, allowing it to lower its price, extend its readership and increase its profitability and the formula was soon copied by all titles.

It represents a major source of income for radio and television channels and the press, possibly making them more independent from government influence but aligning them to business interests. It is the world's earliest identified printed advertising medium.

Indifference curves do not shift because of advertising. Advertising reminds - to the already convinced consumer - the pleasure it brings, so stimulating re-purchasing.

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The Advertising