Question 1

Which of the following statements supports the "advertising equals information" ideology?

Accepted Answer

Advertising provides information about new brands, allowing consumers to learn about their existence and features, which can facilitate market entry for these brands.

Question 2

Some critics state that advertising hampers consumer choice. Which of the following statements could weaken their argument?

Accepted Answer

The statement suggests that advertising incentivizes companies to develop new brands, which could increase consumer choice rather than hamper it.

Question 3

Turn Inc., a large consumer-goods manufacturer, has a strong brand loyalty created by effective advertising over the years. Tim states that this kind of advertising causes barriers to entry, while Joan argues that this is not the case. Which of the following statements supports Joan's argument?

Accepted Answer

The fact that a new brand, Autumn Corp., gains an equal market share to Turn Inc. implies that brand loyalty created by Turn Inc.'s advertising hasn't created barriers to entry. If a new brand can come in and compete with Turn Inc. despite its strong brand loyalty, it shows that loyal customers are willing to switch to a new brand if it offers a better value proposition.

Question 4

The belief that advertising equals _____ reflects traditional economic thinking that views advertising as a way to change consumers' tastes, lower their sensitivity to price, and build brand loyalty among buyers of advertised brands.

Accepted Answer

The term "market power" refers to the ability of a company to control prices and/or manipulate the market in its favor. This aligns with the traditional economic view that advertising can be used to build brand loyalty and decrease consumers' sensitivity to price, thereby giving companies greater market power.

Question 5

Which of the following beliefs takes a positive view of advertising's economic effects?

Accepted Answer

Believing that advertising equals information means that it provides consumers with necessary knowledge to make informed purchasing decisions, which is a positive economic effect.

Question 6

According to the "advertising equals information" ideology, advertising makes entry possible for new brands because:

Accepted Answer

According to the "advertising equals information" ideology, advertising is believed to communicate product attributes to consumers, which can benefit new brands by introducing them to the market and helping consumers understand the unique attributes of the brand or product.

Question 7

The Great Brands campaign, developed by the American Advertising Federation, promoted the economic power of advertising by:

Accepted Answer

The Great Brands campaign promoted the economic power of advertising by featuring companies synonymous with quality advertising. It aimed to showcase the impact of advertising on consumer behavior and brand recognition by highlighting successful companies with effective advertising strategies.

Question 8

Consumer advocates argue that:

Accepted Answer

Consumer advocates often argue that advertising costs are passed on to consumers, leading to higher prices for products and services.

Question 9

The _____ has been running a campaign for several years to convince consumers around the world of the economic value of advertising.

Accepted Answer

The International Advertising Association (IAA) has been running a campaign to promote the economic value of advertising to consumers globally. The IAA aims to educate consumers about the role advertising plays in the economy and the benefits it provides to businesses and consumers alike.

Question 10

Which of the following statements supports the ideology that advertising equals market power?

Accepted Answer

This statement suggests that advertising helps companies establish a strong brand image and market position, insulating them from competition and giving them more discretion to set prices and make other business decisions. This supports the idea that advertising equals market power.

Question 11

Critics point out that relatively homogenous products have price differentiation due to advertising. Which of the following products is likely to be in this category?

Accepted Answer

The answer of Critics point out that relatively homogenous products...

Question 12

Which of the following is a major reason for the American Advertising Federation (AAF) to develop an integrated marketing communications (IMC) campaign?

Accepted Answer

The development of an integrated marketing communications (IMC) campaign by the American Advertising Federation (AAF) is mainly to redefine advertising in the eyes of corporate executives. This involves showcasing the importance and impact of a coordinated approach to marketing communication which includes advertising, public relations, sales promotion, personal selling, and direct marketing. It is aimed at convincing corporate executives to see advertising as a key component of a larger and more cohesive marketing campaign. The other options are not major reasons for the AAF to develop an IMC campaign.

Question 13

Critics of advertising argue that barriers to entry are likely to:

Accepted Answer

Barriers to entry in advertising often require new entrants to spend more on advertising to compete with established brands, increasing their costs and making it harder to gain market share.

Question 14

Which of the following is identified as the American advertising industry's primary trade organization?

Accepted Answer

The American Advertising Federation (AAF) is recognized as the primary trade organization for the American advertising industry, representing various aspects of the advertising community.

Question 15

Marketers who believe that advertising equals _____ view advertising as providing consumers with useful facts of the products and increasing competition in the market.

Accepted Answer

Marketers who believe that advertising equals information view advertising as a means of providing consumers with useful facts about the products. This view assumes that providing information to consumers will increase competition in the market, as consumers will be better informed and able to make more informed decisions about what products to buy.

Question 16

If a marketer for an established company believes that potential entrants to the marketplace must overcome established brand loyalty and spend relatively more on advertising, then he or she is likely to believe that advertising equals _____.

Accepted Answer

The marketer believes that advertising creates a barrier to entry by establishing brand loyalty, which aligns with the market power view that advertising can create and maintain a dominant position in the market.

Question 17

From an economic perspective, advertising can lower prices of a product by:

Accepted Answer

Advertising can foster more competition in a market by increasing awareness of different products and encouraging innovation among firms. This competition can result in lower prices as firms work to attract customers.

Question 18

Topaz is a brand of wrist watches manufactured by Krypton Inc. Krypton spends little money on its advertising, yet Topaz is a highly successful brand owing to its attractive features, exquisite design, and performance. The success of Topaz can be interpreted as evidence that:

Accepted Answer

The success of Topaz despite minimal advertising suggests that the quality, design, and performance of the product are key factors in its success.

Question 19

Many argue that industry prices decrease as a result of advertising. Which of the following perspectives supports this view?

Accepted Answer

According to the perspective that advertising equals information, advertising provides consumers with information about products and prices, increasing competition and decreasing prices as companies strive to offer the best value.

Question 20

According to the "advertising equals information" ideology, advertising causes consumers to:

Accepted Answer

The answer of According to the "advertising equals information" ideology,...

Quiz 21: Evaluating the Social, Ethical, and Economic Aspects of Advertising and Promotion