Chapter 2
The Big Picture: The
Evolution of Advertising
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter Overview
Explains the principles of free-market
economics, and the functions and
effects of advertising
2-2
Chapter Objectives
Explain the role of
competition in freemarket economics
Discuss the functions
advertising performs in a
free market
Identify milestones in
advertising history
Discuss how the role of
advertising has changed
Explore advertising’s past, present, and
future impacts on society
2-3
Assumptions of Free Market Economics
Self - Interest
Complete
Information
Many Buyers
& Sellers
Absence of
Externalities
2-4
Functions & Effects of Advertising
o
Identify and differentiate products (branding)
o
Communicate product features and availability
o
Induce customers to try products and suggest reuse
o
Stimulate product distribution
o
Build value, brand preference, loyalty
o
Lower overall cost of sales
2-5
Evolution of Advertising
Preindustrial
Industrializing
Industrial
Postindustrial
pre-1800
1800-1900
1900-1980
1980-present
z
2-6
Preindustrial Age of Advertising
During this era,
few could read
2-7
Evolution of Advertising
Preindustrial
Industrializing
Industrial
Postindustrial
pre-1800
1800-1900
1900-1980
1980-present
2-8
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
Transportation breakthroughs
facilitated distribution
Increased need for mass
marketing techniques
2-9
Evolution of Advertising
Preindustrial
Industrializing
Industrial
Postindustrial
pre-1800
1800-1900
1900-1980
1980-present
2-10
Industrial Age of Advertising
Fresh markets
for new,
inexpensive
brands of
luxury and
convenience
goods
2-11
Industrial Age of Advertising
The Product
Positioning Era
Product differentiation
Market segmentation
Positioning
2-12
Evolution of Advertising
Preindustrial
Industrializing
Industrial
Postindustrial
pre-1800
1800-1900
1900-1980
1980-present
2-13
Postindustrial Age of Advertising
Consumers
became aware
of
environmental
sensitivity
2-14
Marketing Warfare
Defensive
Offensive
Flanking
Guerilla
2-15
Global Interactive Age
2-16
Global Interactive Age: New Media
2-17
Advertising Ethics and Effects
Ethical advertising can . . .
• Improve standards of living
• Inform of availability of products
• Imbue products with personality
• Help us make personal statements
• Foster free press and nonprofits
2-18
Advertising Ethics and Effects
On the other hand, advertising can:
• Be dangerous if misleading
• Promote unhealthy products
• Encourage conformity
• Glorify conspicuous consumption
• Target vulnerable markets
2-19
Advertising Ethics and Effects
Public service
ads can shape
attitudes
2-20