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Part Seven Special Topics and Perspectives
Belch: Advertising and
Promotion, Sixth Edition
VII. Special Topics and
Perspectives
applied to marijuana purchases. Thus the second set
of ads more closely shows the connection between
drug use and terrorism. One of the commercials
begins with a pretty young woman buying a dime bag
of marijuana and ends with a child being shot in drugwarfare
crossfire. Another links a marijuana user to
various parties in the supply chain and ends with a
connection to a drug cartel.
Some critics of the drug-terrorism ads have suggested
that they create the false paradigm that terrorism
is caused by drugs rather than the illegality of
drugs. Groups such as the National Organization for
Exhibit 22-18 This ad
promotes the economic
value of advertising
22. Evaluating the Social,
Ethical, & Economic
Aspects of Advtising &
Promotion
© The McGraw−Hill
Companies, 2003
Marijuana Legalization contend that the ads argue
more for decriminalization of certain drugs than abstinence.
However, the ONDCP feels that the point of the
ads is summarized quite well by the onscreen message
at the end of each spot: “Drug money supports terrible
things. If you buy drugs, you might too.”
Sources: Ira Tenowitz, “Ads Linking Drugs, Terrorism Return,”
Advertising Age, Nov. 16, 2002, pp. 1, 45; Vanessa O’Connell, “Drug
Czar Says Ad Campaign Has Flopped,” The Wall Street Journal, May
14, 2002, pp. B1, 10; Ira Tenowitz, “White House Buys Anti-Terror
Super Bowl Spots,” www.adage.com. Jan. 30, 2002.
for a firm or a new product or brand; leads to economies of
scale in production, marketing, and distribution, which in turn
lead to lower prices; and hastens the acceptance of new products
and the rejection of inferior products.
Critics of advertising view it as a detrimental force that
not only fails to perform its basic function of information
provision adequately but also adds to the cost of products
and services and discourages competition and market entry,
leading to industrial concentration and higher prices for
consumers.
In their analysis of advertising, economists generally take
a macroeconomic perspective: they consider the economic
impact of advertising on an entire industry or on the economy
as a whole rather than its effect on an individual company
or brand. Our examination of the economic impact of
advertising focuses on these broader macro-level issues. We
consider its effects on consumer choice, competition, and
product costs and prices.
Effects on Consumer Choice
Some critics say advertising hampers consumer choice, as
large advertisers use their power to limit our options to a few
well-advertised brands. Economists argue that advertising is
used to achieve (1) differentiation, whereby the products or
services of large advertisers are perceived as unique or better
than competitors’, and (2) brand loyalty, which enables large
national advertisers to gain control of the market, usually at the expense of smaller
brands.
Larger companies often end up charging a higher price and achieve a more dominant
position in the market than smaller firms that cannot compete against them and
their large advertising budgets. When this occurs, advertising not only restricts the
choice alternatives to a few well-known, heavily advertised brands but also becomes a
substitute for competition based on price or product improvements.
Heavily advertised brands dominate the market in certain product categories, such
as soft drinks, beer, and cereals. 92 But advertising generally does not create brand
monopolies and reduce the opportunities for new products to be introduced to consumers.
In most product categories, a number of different brands are on the store
shelves and thousands of new products are introduced every year. The opportunity to
advertise gives companies the incentive to develop new brands and improve their
existing ones. When a successful new product such as a personal computer is introduced,
competitors quickly follow and use advertising to inform consumers about
their brand and attempt to convince them it is superior to the original. Companies like